GameStop surges after turning a profit and sparks a rally in meme stocks

GameStop jumps after swinging to profit, ignites rally in meme stocks
Image: Reuters

Meme stock GameStop Corp soared over 40% in premarket trading on Wednesday as the video game retailer declared its first profitable quarter in two years, spurring a rally in other retail-friendly firms.

GameStop had an adjusted profit of 16 cents per share in the fourth quarter, compared to a loss of 47 cents per share in the same time the previous year. This was assisted by a strict budget, which meant layoffs.

The firm, located in Grapevine, Texas, and owned by billionaire investor Ryan Cohen, reported a 16% decrease in quarterly expenditures.

GameStop was the most-discussed company on stocktwits.com, an investor social media site.

“The early signs on expenditures are positive, and we expect profitability in Q4 2023,” Jefferies analyst Andrew Uerkwitz said. “But, we must show leverage in non-holiday quarters before we can forecast positive EBITDA for the entire year.”

“Revenue headwinds in the core business remain.” Sales in the fourth quarter fell 1.2% to $2.23 billion.

AMC Entertainment Holdings Inc (AMC.N) and Bed Bath & Beyond Inc (BBBY.O) increased by 10% and 11%, respectively, while other popular stocks among retail investors increased.

The previous year’s high-interest rate environment roiled stock markets, with speculative areas of the market, such as meme stocks, incurring significant losses. GameStop stock has been down 25% in the last year, compared to a 10.3% drop in the S&P 500.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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