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GameStop (GME) Stock Climbs Despite Earnings Miss

Source: Northfoto / Shutterstock.com
GameStop (NYSE:GME) reported a higher-than-expected first-quarter loss yesterday afternoon, but GME stock is up 1.5% in morning trading. The video-game retailer did report revenue above analysts’ aver…

Source: Northfoto / Shutterstock.com

GameStop (NYSE:GME) reported a higher-than-expected first-quarter loss yesterday afternoon, but GME stock is up 1.5% in morning trading. The video-game retailer did report revenue above analysts’ average estimate, and the company may soon split its stock.

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After Amazon’s shares rallied recently ahead of their 20-for-1 split, some investors may be expecting GME stock to act similarly. Shareholders will vote on a proposal today that would increase the count of outstanding common stock. One potential outcome of this proposal is a stock split.

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GameStop’s Q1 Results

GameStop’s per-share loss, excluding certain items, came in at $2.08, versus analysts’ average estimate of a $1.22 per-share loss. However, it reported that its revenue had increased 8% year over year to $1.38 billion, compared with analysts’ mean outlook of $1.32 billion.

In response to supply-chain issues, GameStop kept its inventory elevated, CEO Matt Furlong said on the company’s Q1 earnings conference call.

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“In order to meet customer demand and drive sales growth amidst the tight supply chain, we maintained inventory valued at $917.6 million as of the close of the quarter compared to $570.9 million at the close of the prior year’s first quarter,” Furlong reported.

A Potential Stock Split for GME Stock?

Today, during GameStop’s annual shareholder meeting, the owners of GME stock will decide whether to approve a proposal that would enable “a stock split … in the form of a dividend.”

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Amazon’s stock is slated to start trading on a 20-for-1 split basis on Monday. In the last five trading days, AMZN stock has climbed nearly 5%.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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