On June 7, GameStop (NYSE:GME) will report Q1 earnings and the meme stock community is buzzing. Despite demonstrating some impressive growth over the past month, the video game retailer has struggled to retain momentum.
However, if the company can beat Wall Street’s modest expectations, GME stock has a chance to rise. Given its meme stock status, GameStop tends to garner skepticism from experts, even on its best days. As InvestorPlace’s Eddie Pan reports, institutional sentiment toward GME remains mixed, even as the stock has risen since Q1. Additionally, Ray Dalio’s Bridgewater Associates recently divested from its GameStop position, generating further uncertainty.
Now, GME stock is in full focus as the company prepares to report earnings from the year’s first quarter.
What should investors be expecting? Let’s take a closer look at what investors should be watching for.
GME Stock Investors: What to Watch For
1. Analyst Forecasts
As with any earnings report, Wall Street expectations are of paramount importance. If GameStop can exceed them in the Q1 earnings report, it will likely send GME stock rising. As Pan reports:
“For the quarter, analyst have forecasted revenue of $1.358 billion, which would imply a year-over-year (YOY) decline of 1.45% and a quarter-over-quarter (QOQ) decline of about 39%. During the past few years, Q4 has been a strong quarter for GameStop, likely due to the holiday season. This can explain the QOQ decline.”
Pan also notes that analysts predict an adjusted net income loss of $36 million and an adjusted earnings per share (EPS) loss of 12 cents. All GameStop has to do is come out ahead of these negative forecasts and shareholders will be able to relax.
2. Short Selling Ban
GameStop fans have been watching closely for updates on a pending short selling ban. If regulators successfully enact a policy that prohibits the practice of short selling, it may put an end to some of GameStop’s problems, as it is a popular target for short sellers.
GameStop management will likely address the potential short-selling ban during the June 7 earnings call, offering insights as to how they will handle operations if the bill becomes a law.
3. Plans for Web.3.0 Gaming
In 2022, GameStop turned plenty of heads when it ventured into the world of non-fungible tokens (NFTs). Hype around this controversial commodity has since died down, but the company still is digitally innovating.
It recently announced a partnership with the Telos Foundation to integrate blockchain technology into its “upcoming Web3 game launcher.” This new development certainly has the potential to bolster GME stock if executed correctly. This foray into Web 3.0 will likely also be a point of focus during the earnings call, as investors will want to know the company’s plans for scaling its new launcher and improving the gaming experience through blockchain. Additionally, it may also mean updates on GameStop’s NFT marketplace and its impact on the company’s profitability.
On the date of publication, Samuel O’Brient 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.
