Shares of GameStop Corp. skyrocketed by almost 50% in extended trading on Tuesday after the company reported a surprise quarterly profit and sales that exceeded Wall Street’s expectations. GameStop CEO Matt Furlong said on the company’s earnings call that the retailer is focused on improving profitability year-over-year while continuing to drive long-term growth. He added that the company is taking steps this fiscal year to cut costs, strengthen its financial position, improve terms with suppliers, and meet profit targets.
GameStop’s stock closed at a two-year low, but it’s up approximately 12% over the past four days. The company has posted larger-than-expected losses in three of the past four quarters, but shares have risen an average of 8.2% each of the past four reporting days. The retailer has completed most of its upgrades related to infrastructure, systems, shipping capabilities, and online and mobile platforms. GameStop said it continues to focus on maintaining a healthy inventory position.
GameStop’s Q4 report showed that the company had a net income of $22.9 million, or 29 cents a share, compared to a loss of $215 million, or $2.91 a share, in the year-ago quarter. This surprise profit came as a result of strong sales during the holiday season, which exceeded Wall Street’s expectations. GameStop’s revenue for the quarter was $3.05 billion, up from $2.12 billion a year earlier.
Investors were enthusiastic about GameStop’s Q4 report, causing the stock to surge by 50% in extended trading. The company’s stock ended the regular trading day up 4.6%. GameStop’s management believes that the company is on the right track to improve profitability and meet long-term growth goals. While the retailer has struggled in recent years, its recent success in the holiday season has given investors hope that GameStop can turn its fortunes around.