Shares of GameStop Corp. (NYSE:GME) jumped by almost 10% during the after-hours trading and as much as 15% during the trading session on Tuesday following a third-quarter earnings report from the company that beat most earnings estimates.
Third Quarter Earnings
The Texas-based company posted third-quarter earnings of $0.54 per share beating most Wall Street expectations that the company would post earnings of $0.44 per share. GameStop posted net earnings of $59.4 million for the third quarter or $0.59 per diluted share which is considerably higher than their net earnings of $50.8 million or $0.49 per share during the same quarter last year.
Revenue of the video game and electronics retailer was 1.5% higher year over year to $1.99 billion. GameStop interim chief executive officer Dan DeMatteo stated that the third quarter earnings growth of the company was due to the strong and growing demand for the Nintendo Switch and collectibles according to the earnings release of the company.
GameStop posted a sales growth of 1.9% globally with the sales from their new hardware growing by 8.8% due to the demand for the Nintendo Switch. Sales of the company from their software products also rose by 5.4% while sales from pre-owned products sold was down by 2.4%. Global omnichannel sales of the company also driven by the rise in sales of new hardware jumped by 38.6%.
However, GameStop posted a decrease in the sales of its technology brands by 10.2% to $194.2 million due to the much later release of Apple’s iPhone X as well as the change in the dealer compensation structure of AT&T (NYSE:T) which was previously disclosed.
GameStop also posted a decline of 23.4% in their operating earnings to $18 million while their operating earnings for their technology brands stood at $11.2 million representing a decline of 52.3% compared to their adjusted operating earnings of $23.5 million during the same quarter last year.
Shares of GameStop last traded up at around $17.29 per share during the after-hours trading following the release of the company’s earnings report for the third quarter. However, GameStop shares have lost around 30.56% this year.
GameStop provided a full-year earnings expectation of around $3.10 to $3.40 per share which is higher than most Wall Street expectations of $3.31 per share. The demand for products such as the Nintendo Switch especially during the holiday quarter is expected to drive sales of the company during the fourth quarter.