Shares of GameStop (GME) jumped in after-hours trading after the video game retailer reported earnings for its fourth quarter of Fiscal Year 2024 and approved a plan to invest in Bitcoin. Earnings per share came in at $0.30, which smashed analysts’ consensus estimate of $0.08 per share. However, sales plunged by 28.5% year-over-year, with revenue hitting $1.28 million. This missed analysts’ expectations of $1.48 billion. Nevertheless, adjusted EBITDA for the quarter was $96.5 million versus the $88 million seen in the same quarter during the prior year.
In addition, the company saw free cash flow jump to $158.8 million from the -$18.7 million in Q4 2023 and had $4.775 billion in cash and equivalents at the end of the quarter. It is also worth noting that GameStop was profitable throughout the Fiscal Year. In fact, net income came in at $131.3 million, while free cash flow was $129.6 million. These were significant jumps from last year’s $6.7 million for the former and -$238.6 million for latter.
However, revenue fell significantly compared to 2023, as it fell from $5.273 billion to $3.823 billion. Interestingly, investors could have anticipated the drop in year-over-year revenue by simply looking at GME’s website traffic. As the image below shows, the number of visitors fell over 25% when compared to the same quarter of last year.
GameStop Will Add Bitcoin to Its Treasury
Separately, GameStop also announced that its board has approved a plan to add Bitcoin to its treasury reserves. GameStop said that it plans to invest some of its cash—or possibly money raised through future debt or stock offerings—into Bitcoin, though it didn’t say how much it plans to buy.
Furthermore, the company did not provide investors with guidance, as usual, as management is trying to turn the business around. This makes it difficult to reasonably forecast how the company will perform going forward.
Is GME Stock a Buy, Sell, or Hold?
Turning to Wall Street, only one analyst, Michael Patcher from Wedbush, is covering GME stock. According to him, he sees more than 60.6% downside for GameStop based on his price target of $10 per share.
