What's important to GME Q3?

$Gaming Post (GME)$ The company's earnings for Q3 2024 were announced on December 10th.The company is one of the leading meme stocks, so earnings results are not a major factor in the stock price.The recent performance has also led many investors with heavy speculative sentiment to question Roaring Kitty's influence.

Financials vs. market expectations

Key Financials:

• Net sales: GameStop reported net sales of $860 million in 3Q2024, down 20% from the same period last year and missing market expectations of $888 million

• Net Profit: the company reported a profit of $17.4 million, successfully reversing a loss of $3.1 million in the same period last year, and adjusted EPS of $0.06, beating market expectations

Market Expectations:

• Analysts were generally expecting GameStop's sales to reach $888 million, but the actual results were significantly lower than this expectation, reflecting the gap between the market's optimistic expectations and the reality of the company's performance.

Business Performance by Segment

GameStop's business is divided into three main categories: hardware, software and collectibles:

• Hardware & Accessories: this segment still accounts for a major portion of total sales, but the exact numbers are not detailed in the report.Typically, this category includes game consoles, controllers and related accessories.

• Software: As digital transformation accelerates, traditional physical game sales have been impacted and software sales are under competitive pressure.

• Collectibles: Although this segment accounted for a relatively small proportion of overall sales, its growth potential remains, especially among young consumers.

Analysis of the reasons for the difference between performance and expectations

1. Reasons for decline in sales:

   • Increased competition in the market: With the growing popularity of online games and digital downloads, the traditional retail model was seriously challenged.

   • Changes in consumer behavior: Consumers preferred to purchase games and related products online after the outbreak, leading to a decrease in brick-and-mortar sales.

2. Reasons for improved profitability:

   • Cost control: by closing unprofitable stores and optimizing operating expenses, the company succeeded in lowering operating costs, resulting in profitability despite declining revenues.

   • Adjusted EPS exceeded expectations: Thanks to effective cost management and optimization strategies, the company was able to report a profit even though overall sales declined.