GameStop Q2 preview: where next for GameStop shares?

GameStop shares have been torpedoed after posting its last four sets of quarterly results but, with a new board in place to turn things around, will it be different this time round?

Charts (5)

When will GameStop release Q2 results?

GameStop will publish second quarter earnings after US markets close on Wednesday September 8.

GameStop Q2 earnings preview: what to expect from the results

This will be the first update since GameStop’s management was overhauled earlier this year, starting with the appointment of Ryan Cohen, the founder of online pet supply store Chewy, as chairman. Since then, GameStop has appointed Matt Furlong as CEO, Mike Recupero as CFO, Jenna Owens as COO and Elliott Wilke as chief growth officer.

This new board is charged with turning GameStop from a loss-making retailer geared toward bricks-and-mortar into a leading one-stop-shop for video games online. The fact most of the new management have come from Amazon should provide further confidence in the team’s experience.

Cohen outlined a new plan in June that, put simply, was for GameStop to digitally disrupt the video game industry in the same way Chewy and Amazon disrupted their respective fields by leading online and in areas such as fulfilment. But details have remained scarce and any update that could buoy the outlook could prove supportive to the stock.

Investors will hope any update will be accompanied by some form of outlook as guidance has been suspended, although Cohen has stated he wants to provide investors with results rather than promises.

Still, the board will have already started implementing change at the business and investors will want to see this translate to its results. Analysts are expecting revenue to rise to $1.12 billion from $942 million while its adjusted Ebitda loss is forecast to narrow to $34.0 million from the $62.4 million loss booked the year before. The net loss at the bottom line is expected to narrow to $42.6 million from $111.3 million.

Still, it is worth noting that GameStop has suffered heavy losses the day after posting earnings for the last four consecutive quarters, even after beating expectations. Shares have been trending higher over the past two weeks, but the update is likely to inject some more volatility into the stock and decide the future direction.

Where next for the GameStop share price?

GameStop share prices recently rebounded off 150 lows in late August and trades within a pennant pattern which could suggest that a break out could be on the cards as the price nears the end of the pattern. 

The price also trades above its 50 & 200 sma on the daily chart indicating a bullish bias. The RSI is in positive territory but pointing lower. 

The bulls could look for a breakout above $240 the descending trendline of the pattern, bringing $345 the June high back into focus.  

Bears might be looking for a move below $160, rising trendline of the pattern for further losses towards $130 the May low. 

How to trade GameStop shares

You can trade GameStop shares with City Index by following these four steps:  

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for ‘GameStop’ in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

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