Wall Street analysts are still confused about GameStop's plan after latest quarterly report

Published Thu, Sep 9 20218:06 AM EDTUpdated Thu, Sep 9 20219:52 AM EDT

Jesse Pound @/in/jesse-pound @jesserpound

GameStop 's latest quarter did little to answer Wall Street analysts' concerns about the company's turnaround plan and sky-high stock price. The company reported Wednesday it had $1.18 billion in net sales for the second quarter, up from $942 million in 2020, and $1.78 billion in cash and restricted cash at the end of July. The company also reported a loss of 85 cents per share, and its conference call lasted roughly 7 minutes as management did not take questions. Shares of the company were under pressure in early trading. However, the stock is still more than $100 above where it was before the Reddit-fueled short squeeze captivated the investing world earlier this year. The wild swings of the stock have led several Wall Street firms to drop coverage of GameStop, and those who remain are cautious or bearish on its prospects. Though GameStop Chairman Ryan Cohen has pushed for the company to pivot to become more of an e-commerce company, the retailer has given little information about its strategy and that continued with the latest earnings report. Loop Capital's Anthony Chukumba said on CNBC's " Squawk Box " that GameStop's short and detail-light earnings call was "shameful." Baird analyst Colin Sebastian, who does not have a rating on the stock, said in a note that the lack of clarity around the company's revenue plans is a concern but that the rough plan may be coming into view with its new warehouse facilities. "For investors wondering if GameStop is creating a slimmer, more e-commerce-oriented version of Best Buy, the answer may very well be yes," the Baird note said. Wedbush's Michael Pachter said the company "is well-positioned to be a primary beneficiary of the new console launches, and we remain quite optimistic that it will return to profitability by FY:21." However, he said in a note there was "still no strategy" for a long-term turnaround and that the stock price was still too expensive and unrelated to fundamentals. Jefferies analyst Stephanie Wissink, who has a hold rating on the stock, said that infrastructure investments and new hires were a key thing to watch going forward as investors try to learn more about the turnaround plan. Wissink also mentioned that the booming NFT market could be an area for Gamestop to expand into. Shares of GameStop are up more than 900% year to date, and Cohen — who previously cofounded Chewy — has brought on several executives with e-commerce experience to help transition the company to the digital era. The company has raised more than $1.6 billion through stock sales this year . —CNBC's Michael Bloom contributed to this report.

A woman walks past the GameStop store inside the Susquehanna Valley Mall in Selinsgrove, Pennsylvania, on Jan. 27, 2021.

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GameStop's latest quarter did little to answer Wall Street analysts' concerns about the company's turnaround plan and sky-high stock price.