Shares of GameStop (NYSE:GME) gained over 32% in after-hours trading after the company reported earnings for its fourth quarter of Fiscal Year 2022. Earnings per share came in at $0.16, which beat analysts’ consensus estimate of -$0.13 per share. Sales decreased by 0.9% year-over-year, with revenue hitting $2.23 billion. This beat analysts’ expectations of $2.18 billion.
GameStop’s remarkable win came about by several factors. First, it’s carrying a lot less inventory than it was; inventory this time last year was at $915 million. Now, it’s dropped to $682.9 million, a drop of nearly a third. Further, its long-term debt is entirely connected to a French government COVID-19 response loan, which continues to carry low interest rates.
Overall, Wall Street has a consensus price target of $12.65 on GameStop, implying 28.33% downside risk, as indicated by the graphic above.