Gamestop has reported a significant drop in revenue for the second quarter and announced plans for major restructuring efforts. The U.S. video game retailer disclosed that its quarterly revenue amounted to $798.3 million, down from $1.16 billion during the same period last year. Analysts had anticipated revenue of $895.7 million. This sharp decline is attributed to the increasing shift of consumers away from traditional retail stores towards online shopping. Additionally, Gamestop plans to close more stores than in previous years, reinforcing statements made by the company’s CEO, Ryan Cohen, in June.
In response to ongoing challenges, Gamestop revealed it has filed for a stock offering of up to 20 million shares. The proceeds will be used for “general corporate purposes,” including potential acquisitions and investments. Following this announcement, the company’s stock price dropped by more than ten percent in after-hours trading.
Gamestop has been struggling for some time with declining sales in its core business—selling new and used physical video games—as the market increasingly shifts towards digital downloads and streaming services. Despite these challenges, the stock has been highly volatile this year, partly due to the return of influencer-investor Keith “Roaring Kitty” Gill to social media, a key figure in the 2021 meme stock rally. However, analysts at Wedbush believe the company still faces nearly insurmountable obstacles on its path to recovery.
