Reddit users like GameStop stock, but the business is still struggling

The video game retailer's shares are still far higher after investors on social media pushed their value up.

Ian Sherr Contributor and Former Editor at Large / News
Ian Sherr (he/him/his) grew up in the San Francisco Bay Area, so he's always had a connection to the tech world. As an editor at large at CNET, he wrote about Apple, Microsoft, VR, video games and internet troubles. Aside from writing, he tinkers with tech at home, is a longtime fencer -- the kind with swords -- and began woodworking during the pandemic.
Ian Sherr
3 min read

GameStop's become the center of a social media-fueled drama.

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GameStop's stock has risen 948% so far this year, to $180.94, and it has little to do with selling video games. It turns out, actually, that the retailer at the center of a social media-fueled Wall Street battle over GameStop's share value hasn't caused the same enthusiasm for the company's brick-and-mortar business.

In GameStop's first report since the dramatic swings in its share value, the company said Tuesday it tallied $2.12 billion in sales during the shopping season ending Jan. 30, a slight dip from the $2.19 billion it reported a year prior. That amounted to $1.19 per share in profits, up significantly from the 32 cents reported a year ago, but still far below the $1.35 per share Wall Street analysts surveyed by Yahoo Finance had expected. Analysts had also expected the company to report sales of $2.2 billion.

But the game retailer's financials have had little to do with its stock lately. GameStop shares 2,700% in the span of mere weeks as it became the battleground of social media-fueled investors, who chose to bet against Wall Street traders who'd wagered GameStop would fail. As a result, the stock went from $17.25 per share at the beginning of the year up to as high as $483. That day it hit its peak, it also fell to a low of $112.25. 

The wild swings halving and doubling its value in the span of a few days caught the attention of regulators and lawmakers, who vowed to launch investigations into whether anyone had engaged in stock price manipulation.

During a Feb. 18 hearing on Capitol Hill, California Rep. Maxine Waters said the hearing was "an opportunity for this committee to get the facts about the role each of the entities of the witnesses represent played in the events we are examining today." Ultimately, though, little was gleaned from the hearing that those who'd watched the drama closely didn't already know.

GameStop's shares haven't collapsed since the buying frenzy calmed down. Investors seemed barely affected by the earnings results too, pushing shares up 5% in after-hours trading to $191.01.

But then, the company started its typical executive conference call with analysts by saying there would be no traditional question-and-answer session. Instead, the company's CEO, George Sherman, repeated details from the company's earnings report. Then, he thanked outgoing executives for their service, welcomed former Amazon and Google executive Jenna Owens as GameStop's new operations chief, and ended the call.

Enthusiastic investors likely excited to hear what GameStop's executives thought of the recent drama and where the company was headed were left with almost nothing. And so the stock swung to a loss of more than 10% from its closing price of $181.75 per share. It was now $162.

The company did acknowledge the social media investors, many of whom discuss the company in the Reddit community r/WallStreetBets. 

"Our Class A Common Stock price has recently experienced extreme price fluctuations," the company wrote in its filing to the Securities and Exchange Commission Tuesday, coinciding with its earnings announcement. "During this time, we have not experienced any material changes in our financial condition or results of operations that would explain such price volatility or trading volume."