GameStop prepares to close even more stores after disappointing second quarter

Gamers, look away!

GameStop has announced it will close even more brick-and-mortar locations next year after releasing disappointing financial reports.

The company said it is struggling to sell hardware in its stores worldwide as more games are being downloaded digitally and even ordered online.

The next round of closures will likely be even more drastic than the reduction the company experienced last year.

The once-esteemed retailer closed 287 stores worldwide in the 12 months to March this year.

That round of closures left just 4,000 stores — a number that is expected to shrink even further. The company did not say how many stores it plans to close, but the number is expected to be significant.

The earnings report released Wednesday sent GME shares into a tailspin, dropping 15% in a single day. The company has lost 7% over the past month.

The latest report is a far cry from the peak of meme stocks’ popularity, when GME stocks surged in value thanks to motivated retail investors.

GameStop shares have become a moral war for retail investors battling the overwhelming power of institutional investors.

GME stock soared in 2021 as day traders cheered on institutional investors who got caught selling short positions.

This ushered in the era of meme stocks and coins – financial investments made not on the strength of an asset, but by a group of interested amateur investors.

Earlier this year, one of GME’s leaders, internet icon Roaring Kitty, returned to X and attempted to revive the stock market battle.

The stock surged 119% on the news that Roaring Kitty was back and “hanging on,” which is internet slang for “clinging on for dear life.”

However, this rise in the company’s share price did not last long and its value quickly fell to its base level.

Now, as GameStop shares continue their downward trajectory, those good times seem distant.

Revenue for the latest quarter – ending August 3 – amounted to $798.3 million, compared with $1.16 billion in the same quarter last year.

GameStop shares are up 18.5% since the beginning of the year, although some analysts like Jim Cramer believe the stock’s price of around $20 is definitely overvalued.

The management hopes that closing unprofitable stores will increase the efficiency of the entire company.