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GameStop jumps despite second-quarter earnings miss

Yahoo Finance's Ines Ferré breaks down second-quarter earnings for GameStop, plus news that the retailer is partnering with crypto platform FTX.

Video Transcript

SEANA SMITH: GameStop shares moving to the upside. Look at that, up just about 1% coming out with its quarterly results. Ines Ferre has that for us. Ines.

INES FERRE: Yeah, Seana. And it looks like it's a miss on the top and the bottom line. The company's adjusted loss per share came in at $0.36. The street was expecting $0.34. Its net sales came in at $1.14 billion. The street was expecting that to come in at $1.28 billion. Its second quarter proceeds from sale of digital assets, $77.3 million. And just looking at their press release and a couple points stand out here. The company, GameStop, talking about the launch of the company's digital wallet by launching the company's nonfungible token NFT marketplace.

Also, ended the period with cash and cash equivalents of $908.9 million as well as no debt other than a low interest unsecured term loan associated with the French government's response to COVID-19. Now remember that GameStop has been really focusing on digital assets. CEO Matt Furlong saying in the past that the digital assets is the future of gaming. They've been focusing on the GameStop wallet.

And the stock, as you've mentioned in after hours, seeing a bump. Year to date though, the stock is down 37%. Remember that they did a stock split, a four for one stock split back in July. And since August 16, the stock is down about 40%. That's after Chairman Ryan Cohen's RC Venture sold their share of BBBY. The earnings call will be at 5:00 PM. Don't expect a Q&A. In the past, there hasn't been Q&As. There's only four analysts that cover this stock. You've got three sell ratings, one hold rating on the stock with a price target of $7.50, guys.

SEANA SMITH: All right, Ines. Thank you. And also while you were speaking, some more headlines crossing the wires here. GameStop forming a partnership with FTX. I think that's a big reason why you're seeing that stock now up just around 11%. The partnership is intended to introduce more GameStop customers to FTX's community here, something obviously that I guess the street is taking as an encouraging sign here for GameStop there. Ines mentioned, Dave, the sales that we saw from the digital assets, its NFT business during the quarter of 77.3 million.

That's up slightly from its previous quarter of 76.9 million. But that FTX partnership, the big reason why we're seeing that share pop right now.

DAVE BRIGGS: Yeah, it's got to be the only reason. When you look in the report, when you look at the last several reports, they haven't turned a profit since Q4 of 2020 other than the Wall Street bets and Ryan Cohen. What has driven this stock up is largely just the meme trade as of late. When you look at the retail aspect, which is still what GameStop is, we've seen softness in the gaming sector and largely online games. It is moving far away from what GameStop's current retail industry business is.

And is the NFT-- that market is also struggling as well. So it's hard to imagine anything that's going to rally this in the long term, down 37% year to date, Rachelle. It's pretty bleak.

RACHELLE AKUFFO: Well, something that I thought that was interesting, and I tend to pick these things up from GameStop, these collectibles. Actually, their collectibles, sales from that segment, actually expected to grow long term. They were 223.2 million for the quarter. That's compared to 177 million in the prior year second quarter. So clearly, there is still some appeal there. But it's hard once you've sort have that meme stock label attached to you to really try and figure out how to navigate this space.

But obviously at the moment though, GameStop up about 11% there in after hours trading.

DAVE BRIGGS: Yeah, that FTX news is big. CEO Matt Furlong has his hands full there with GameStop.