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GameStop posts narrower-than-expected net loss in Q3

GameStop (GME) reported a narrower-than-expected loss in its third quarter, shrinking net losses down to $0.01 per share. The gaming retailer's revenue fell short of estimates.

Yahoo Finance's Pras Subramanian, Josh Schafer, and Alexandra Canal discuss GameStop's quarterly performance and the board's decision to approve the company investing in other equities.

Editor's note: A previous version of this post incorrectly stated GameStop's loss per share for the quarter. We regret the error.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

PRAS SUBRAMANIAN: I'm starting with the meme stock favorite GameStop here. Miss on the topline here, 1.08 billion versus 1.182 billion, slight miss there. And then also a miss on the bottomline of EPS adjusted here, $0.18 loss versus a $0.08 loss expected. Cash and cash equivalents at 1.21 billion. So they're doing OK there.

Interesting point that I noticed here in the flag here, in the report here. The board approving a new policy to invest in equities. I'm not sure what that means. Talking to our head of news, Myles Udland saying that basically the meme stocks, they now invest in other meme stocks. I thought that was pretty funny.

You know, Ryan Cohen just joined the-- he left the board to go become CEO on the end of September. So kind of a lot going on for the company. We don't know what's going to happen in terms of-- there's no guidance here. So we don't know what's going to happen with Q4 and holiday sales and things like that. But a lot to watch here with the company.

JOSH SCHAFER: I think that's probably why you're seeing relatively muted trade, right? We just showed the stock down about 1%. GameStop--

ALEXANDRA CANAL: It's down.

JOSH SCHAFER: Yeah. Moving a little bit to either side of the flat line. But overall, not expected to have an earnings call again from Ryan Cohen. So you really don't get a lot of look into what's down the line for GameStop, which is I think what people care about when you think about a retail-- a retailer that sells video games in person, right? That's a little bit of a forgone business that is not the business it was 20 years ago.

So you want to know what the plan is for all of next year, what are the plans for growth, et cetera. And you just don't really get that from this company right now. So it's not much of a fundamental trade really on earnings, because I don't think the fundamental of GameStop really changed that much by just looking at the release.

ALEXANDRA CANAL: Yeah. And Wall Street analysts have pointed that out heading into earnings. There was a note from Wedbush. Wedbush has an underperform rating a $6 price target and did point to some of those obstacles when it comes to how a company like this can sustain growth over time. Some of those challenges include the mix shift of game sales from physical to digital. The "Grand Theft Auto" video game, that was something that we're seeing going to go on Netflix mobile.

And it's just one of those stories that you think about a company like GameStop, how can they continue to innovate? How can they bring on new types of customers, new types of distribution models? How do they diversify and grow in a meaningful way? And it just seems like we don't have those answers right now.

Then Wedbush also pointed out that the recent appointment of the executive chairman to the position of president, CEO, and chairman reflects the inability to attract some executive talent to come to this company and turn it around when there are all these overhanging issues.

PRAS SUBRAMANIAN: Yeah. Really interesting point about that. But really quickly, that small move after the after-hours, it's kind of surprising to me reading that the options skew data was saying, it was imputing a 20% move in the stock after bell. And it's really-- I'm surprised by this movement.

ALEXANDRA CANAL: It was up 20%.

JOSH SCHAFER: IT'S up 20% just one day last Wednesday. When you look at a longer term chart of GameStop, it got a little bit of that meme activity. And that's what I'm excited to see as we--

PRAS SUBRAMANIAN: The after-hours moves.

JOSH SCHAFER: Right. Well, it'll be interesting to see what happens tomorrow, right? When you get more retail involvement on a normal trading day, just the fact that GameStop is in the news, does that make the meme trade exciting? Right, that's the fun part. That's the fun part of GameStop.

ALEXANDRA CANAL: Not necessarily about the news, right?

JOSH SCHAFER: Yeah, no. Not about the news--

[INTERPOSING VOICES]

PRAS SUBRAMANIAN: I know we don't want to talk about fundamentals, but real quick. The new "Call of Duty" game, usually came out in the third quarter. It got pushed to the fourth quarter. So we don't have that data yet for this year. So we'll see. Might be a boost there for them in Q4, but we'll find out.