Gamestop (GME) getting fragged despite record Q1 earnings

So far so good. Reading the above paragraphs you may wonder why the stock is getting so beaten up this morning. Well, the answer comes in the company's Q2 and full year forecasts. Even here, the numbers are not that bad. Wall Street had been hoping to see the company show forecast of 26 cents a share for the second quarter, and Gamestop forecast in-line estimates of 26 to 28 cents. During the current quarter, the company estimates that same-store sales will grow by 12% to 14%, much lower than the 27% it had in the first quarter, but still pretty respectable.

The full year forecast is what is really causing the stock trouble. The company raised its full year EPS forecast to $2.30 to $2.39, but that low end is slightly under the $2.33 that Wall Street was hoping to see.

So basically what we are seeing here is a record quarter, with some really nice numbers, but a full year forecast that was just not enough to get Wall Street enthused about the stock.

Look for the stock to open lower, but do not be surprised if you see some bargain hunters coming in later in the morning and into the afternoon to push the stock back up by the end of the day.

Disclosure: Mr. Fowlkes holds a long position in GME

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.