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Video-game retailer GameStop Corp. (NYSE: GME) is seeing quite a sell-off in the wake of its first-quarter earnings report. This morning, GME reported net income of $70.4 million, or 42 cents per share, topping year-ago results by a nickel per share and beating analysts' estimates by a penny. Sales were on the upswing as well, gaining 9% to $1.98 billion to match Street expectations (same-store sales dropped 1.5%).
While all seemed fairly well and good for this reporting period, the future isn't quite so bright. Company officials project per-share earnings of 28 to 33 cents, falling considerably shy of the 40 cents expected by analysts. What's more, same-store sales are now projected to drop between 8% and 11%.
GME CEO Dan DeMatteo told the press that "In the [upcoming quarter] . . . we face very strong comparisons to the prior year period . . . and a significantly more brittle global economy . . . we do expect the back half of this year to be stronger than the first half due to a full and wide-ranging new title lineup."
In late-morning activity, GME shares have plunged more than 15% to a two-month low. Options traders are notably active in the front-month series, trading the newly out-of-the-money June 22.50 and 24 calls. Near-the-money June puts have seen modest action in today's session as well.
Beth works for The Options News Network (www.ONN.tv), which provides daily options commentary. The above comments are not intended as trading advice.
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