By Dhirendra Tripathi
Investing.com – GameStop (NYSE:GME) shares were down 14% in Wednesday’s premarket trade after the videogame retailer said it's looking at raising fresh capital to fund its much-touted digital transformation.
The company said it was considering the step as it released its results for the quarter through January, which fell short of expectations.
GameStop reported a Q4 non-GAAP EPS of $1.34 on revenue of $2.12 billion compared with consensus estimates for EPS of $1.35 on revenue of $2.21 billion.
Overall sales fell 3.3% due to the closure of dozens of outlets across the U.S., but same-store sales grew 6.5%. The company said its guidance remains suspended.
Wedbush analysts downgraded the stock to "underperform" from "neutral" after the quarterly results, saying the short squeeze has boosted the share price to levels that are completely disconnected from the fundamentals of business.
The stock up is up 900% this year, following the management’s announcement of attempts to generate more of its sales through online channels. This includes appointing Chewy (NYSE:CHWY) founder CEO Ryan Cohen to the board along with top-level reshuffle. On Tuesday, it also announced the appointment of Amazon and Google veteran Jenna Owens as chief operating officer, while Neda Pacifico, formerly of Chewy, will take responsibility for e-commerce. Zulily’s Ken Suzuki will take over as head of supply-chain systems.