The GME stock price has remained in a consolidation phase this year as market participants watched its core businesses, balance sheet, and its Bitcoin accumulation strategy. So, will the GameStop share price rebound after earnings?
GameStop’s business is showing mixed signals
GME, the popular video game retailer, is sending mixed signals. On the one hand, there are signs that the core business is doing well, a move that analysts expect will continue in the foreseeable future.
The most recent results showed that the company’s sales rose to $972 million in the second quarter, up from $798 million in the same period last year.
This growth brought its six-year revenue from $1.68 billion to $1.7 billion, a notable turnaround for a company whose business has been under pressure for a long time as consumers moved to digital video streaming.
GameStop also turned a bigger profit than was previously expected. Its net income rose to $168 million from the $14.8 million expected. The earnings-per-share rose to 38 cents from the previous 4 cents a year earlier.
Most importantly, the company has one of the best balance sheets in the retail industry. It ended the quarter with over 8.69 billion in revenue, up sharply from the $4.19 billion in the same period last year.
As a result, the company ended the quarter with over $10.3 billion in assets from the $5.5 billion it had in the same quarter last year. Total liabilities, on the other hand, moved to $5.16 billion. Most of this liability is the $4.16 billion in long-term debt it has accumulated.
On the other hand, GameStop’s stock price has struggled because of its Bitcoin accumulation strategy, which is showing signs of flipping. It now holds 4,710 coins currently worth about $434 million. At Bitcoin’s peak of $126,300, its hoard was worth over $595 million.
GME earnings ahead
Looking ahead, the next key catalyst to watch for the GME stock price, which will come out on Tuesday this week.
Wall Street analysts expect the data to show that its revenue rose by 14.76% in the last quarter to $987 million. Its earnings per share is expected to move from $0.06 last year to $0.20 in the last quarter.
The company’s annual revenue guidance will be $4.16 billion, $8.76% increase from last year, followed by $4.28 in 2026. If these numbers are correct, and if Bitcoin price rebounds, chances are that the stock will rebound.
The daily timeframe chart shows that the GME share price has remained in a tight range in the past few months.
A closer look shows that it has settled at the key support level at $20.8, a level it has failed to move below since April this year.
It is hovering at the 50-day and 100-day Exponential Moving Averages (EMA), while the Average Directional Index (ADX) has retreated.
Therefore, the stock will likely remain in this range in the coming days, and possibly rebound. If this happens, the stock will likely retest the descending trendline, which connects the highest swings since January this year.
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