GameStop's moment of truth
There's been a deafening silence from GameStop since the company's stock took Reddit boards — and the world — by storm. That will change on Tuesday.
What's happening: Executives will release quarterly earnings and speak publicly to Wall Street for the first time since a Reddit-fueled rally caused a historic surge in its stock price.
The big question: Whether the saga translates into anything that helps the company overcome the hurdles that threaten its survival.
- So far, GameStop has sat out the hype.
- Unlike AMC (another company in the meme stock cohort), it hasn't used the newfound market enthusiasm to raise money that could fund turnaround ambitions.
- Of note: Since the Reddit saga, its CFO, who's been applauded by Wall Street for helping firm up the company's balance sheet, resigned.
Storm clouds: The company's main business — selling physical games in physical stores — has been decimated by digitization.
- Thought bubble from Axios Gaming correspondent Stephen Totilo: Selling boxed games is a fading market as people switch to downloading. Selling gaming hardware has very low margins — and GameStop's big business plan last year was to turn stores into hangout spaces, which ran afoul of COVID-19.
What to watch: The company has said in recent weeks that it's moving to catch up to the times, with Chewy co-founder Ryan Cohen taking the lead. But those plans remain vague.
- "In theory, [GameStop] could raise cash and buy an esports player, buy a steaming service, buy a company that produces games," longtime analyst Joe Feldman tells Axios — all things that could help it compete.