GameStop’s earnings report: 15 things you might have missed

GameStop published their latest form 10-K on March 26, 2024. While the filing date was on March 26, the document date is February 3, 2024. In this article we dive deeper into the filing and highlight some interesting bits you might have missed.

You can find the form or read along with us right here!

Our merchandise? Collectibles, which included digital asset wallet and NFT marketplace activities

On page 2 of the filing GameStop mentions their merchandise, which includes hardware, accessories, software, and collectibles. Under collectibles they mention their collectibles also included the digital asset wallet and the NFT marketplace activities. “However, both activities were wound down in the fourth quarter of 2023.”

GameStop refurbishes products and recycles and achieved a reduction in YoY carbon emissions in excess of 10%

Also on page 2 there is mention of sustainability. “In 2023 alone, through our U.S. refurbishment center, we refurbished over 1.1 million software discs and over 3.0 million consumer electronic devices, and recycled over 0.6 million pounds of e-waste.”

States with the most and least store locations

Based on the map, one could say there are more GameStop locations on the east coast of the US and fewer in states that are more distant.

GameStop’s competition

According to the filing, GameStop says their competitors in the USA (among others) are:

Walmart
Target
Best Buy
Amazon

In Europe they are FNAC-Darty, Media Markt-Saturn, Amazon, and major hypermarket chains like Carrefour.

In Australia: JB HiFi, Big W, Target, and Amazon.

Every region has Amazon as GameStop’s competitor. This goes hand in hand with Chewy going head-to-head with Amazon and GameStop wanting to become an Amazon-killer.

Interesting reminder: Matt Furlong, former GameStop CEO was an executive at Amazon.

Scholarships

GameStop says they have provided more than $800,000 in scholarships, as per page 5.

Holiday season can have a big impact on financial results

On page 7, under the RISK FACTORS item, GameStop mentions a potential reason why Q4 2023 revenue was less than expected. “Our business, like that of many retailers, is seasonal, with a major portion of our sales and operating profit realized during the fourth quarter of fiscal 2023. (…) Any adverse trend in sales during the holiday selling season could lower our results of operations for the fourth quarter and the entire fiscal year and adversely impact our liquidity.”

Risks related to their common stock include some interesting things

Starting on page 12, GameStop lists risks related to their common stock. Some notable parts:

“Short squeezes”. “A large proportion of our Class A Common Stock has been and may continue to be traded by short sellers which may increase the likelihood that our Class A Common Stock will be the target of a short squeeze. A short squeeze has previously led and could continue to lead to volatile price movements in shares of our Class A Common Stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our Class A Common Stock necessary to cover their short positions, the price of our Class A Common Stock may rapidly decline. Stockholders that purchase shares of our Class A Common Stock during a short squeeze may lose a significant portion of their investment.”
Comments by analysts, blogs, articles, message boards, and social and other media.
Large stockholders exiting their position or an increase or decrease in the short interest.
Actual or anticipated fluctuations in our financial and operating results.
Acquisition costs and the integration of companies we acquire or invest in.
The costs associated with the exit of unprofitable markets, businesses or stores.
Some interesting aspects, which are thoroughly known by GameStop’s retail investors.

2024 has the most amount of store leases expiring

At total of 1,350 lease terms will expire in fiscal 2024. This offers flexibility for extension or relocation.

Size of offices and distribution facilities

Office and distribution facilities total an approximate of 2 million square feet, which is the size of this:

Or almost as big as Grand Central Station.

Does not anticipate a dividend

Written on page 17, GameStop says “During the past four fiscal years, we have not declared, and do not anticipate declaring in the near term, dividends on shares of our Class A Common Stock.”

Simplified stock chart on page 17

Thanks GameStop, this is sure to raise questions when asking unknowing traders and investors what that big spike in 2021 was!

GameStop also provides a convenient table to see how the stock’s price has fared against the general market:

GameStop mentions the market price of its stock has been extremely volatile due to circumstances, including a short squeeze

“As noted above under the heading “Risk Factors — Risk Related to Our Common Stock”, the market price of our Class A Common Stock has been extremely volatile due to circumstances outside of our control, including a short squeeze that led to volatile price movements that were unrelated or disproportionate to our operating performance.” (Page 18)

Cash on hand is actually $921.7 million

Though in total, GameStop has control over more than $1.1 billion and $475.7 of available borrowing capacity under their revolving credit facilities, but that 1.1 billion includes marketable securities of $277.6 million. GameStop mentions this on page 22.

The only remaining debt is $28.5 million and consists of six separate unsecured term loans

They are held by Micromania SAS, the French subsidiary of GameStop. The total amount was €40 million (just over $42 million) in fiscal 2021. You can find it on page 22.

Advertising expenses decreased a lot

“Advertising expenses for fiscal 2023, 2022 and 2021 totaled $39.3 million, $75.0 million and $93.6 million, respectively.” This is stated on page 44.

We might have easily missed more interesting or important information. That’s no surprise, seeing as how big reports can be. Which things you read in the 10-K were the most surprising or interesting to you? Let us know in a comment!