Following the first bell on Wednesday, GameStop is set to report its quarterly results. It has a cult following of individual investors looking for progress to turn around the struggling videogame retailer following its recent share market surge.
GameStop's volatile shares have risen over 80% in the past month, and they are now 15% below their $11.00 closing price in January. It was when a massive rally driven by investors on the Wallstreetbets trading forum Reddit made the stock the most traded on the U.S. market for several days.
A recent rise in AMC Entertainment Holdings attracted increasing amount of attention from individual investors and commenters on Wallstreetbets, but GameStop remains one of the most discussed stocks on the forum.
AMC is up over 2,400% year to date compared to a rise of over 1,400% in GameStop, which also holds a quarterly shareholder meeting on Wednesday ahead of its closing-door report after the bell.
Options prices suggest that the stock of GameStop could be revised to 24% for both directions by Friday, according to Trade Alerts.
Although the recent rollout of new videogame consoles is likely to benefit GameStop, analysts warn that its soaring stock price has been disconnected from the company's day-to-day business. At least two Wall Street analysts recently dropped the coverage of the company.
The GameStop core business of selling new and pre-owned videogame disks is shrinking as consumers move to digitally downloading games or streaming, and it has lost money for the past three years. Chewy, the billionaire co-founder of online pet supply retailer Ryan Cohen, hopes to transform GameStop into an ecommerce business that can take on big box retailers.
The actual views of retail investors and the long-awaited game strategy continue to overshadow bullish results, Wedbush analyst Michael Pachter warned in a preview note.
According to S 3 Partners, a financial data firm, GameStop short sellers currently have $3 billion at stake, up from $1.3 billion at the end of 2020.
The company has yet to announce a replacement for Chief Executive George Sherman, whom it has announced that he would step down by July 31.
Analysts expect revenues of $1.16 billion for the quarter that ended in April, up 14% from the year before when the economic lockdown over coronavirus crippled brick and mortar stores. Analysts expect an adjusted quarterly loss of 84 cents per share to be forecast.
The company on April 5 said its global sales had increased 11% in the first nine weeks of its fiscal year.