![](https://a673b.bigscoots-temp.com/wp-content/uploads/2017/08/gamestop-store.jpg)
Shares in GameStop Corp. (NYSE: GME), driven by social media activity, retail investors and institutions that have worked to cash in on the volatility, have pushed the retailer’s market cap to $18 billion. Before the start of 2021, the stock traded at under $20, which was a rational figure based on GameStop’s troubled future. They currently trade at $251. GameStop is among the retailers that have been beaten down by Amazon.com, and that will continue. Its business model continues to make it highly vulnerable to sharp drops in revenue.
GameStop will announce earnings this week. Whether they are above or below consensus forecasts, the pattern of struggle will not change. Two recent announcements by the company show how battered the company is. GameStop announced the results from the quarter that ended January 30, which means they were unaffected by the COVID-19 pandemic. Revenue was $2.12 billion, down from $2.19 billion in the same period the year before. The retailer had razor-thin margins. Net income was $81 million compared with $21 million the year before.
GameStop also announced its results for the nine-week period that ended April 3. Global sales were up 11%. However, this included a comparison to the period of retail devastation brought on by the pandemic. For the five-week period that ended April 2, sales rose 18%. Given how poorly GameStop performed in the same five-week period the year before, the numbers were horrible.
The only bright spot in GameStop’s figures is that e-commerce revenue rose 175% in the fourth quarter. However, the company did not indicate that this was enough to drive its top-line toward better levels several years ago. GameStop’s revenue, with pandemic influence left to the side, has continued to deteriorate since 2017.
GameStop is not a turnaround candidate. It faces the same impossible battle as other brick-and-mortar retailers. It has a cost base that is too high and a long-term drop in revenue.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.