GameStop’s success doesn’t belong in a meme

NEW YORK, Sept 7 (Reuters Breakingviews) - Meme-stock success might look more whimper than bang. GameStop (GME.N), the poster-child for pandemic-era retail-trader enthusiasm, reported second-quarter results on Wednesday that showed losses narrowing and positive, if miniscule, adjusted EBITDA. It’s an improvement on the path to sustainability, especially compared to other retail darlings like bankrupt Bed Bath & Beyond. But GameStop has ditched its most excitable fever dreams along the way.

The Grapevine, Texas-based company’s business hasn’t changed much. Video games and consoles generated over 85% of sales, almost exactly the same as its last pre-pandemic quarter. Hardware sales fell 18% from the prior quarter, as the after-effects of supply shortages fade. Sales of collectibles, far from taking off, are down 24% year-over-year.

Chewy (CHWY.N) founder Ryan Cohen became chairman in 2021, promising an e-commerce makeover and a breakthrough NFT marketplace since then, exciting the Reddit-addicted traders piling into the stock. That has not panned out. What has is the boring work of cost cuts. Sales, general and administrative expenses fell under 28% of sales, versus 34% a year ago. The company no longer even holds an earnings call to preach to the faithful. GameStop’s share price may still be well above 2019 levels, but its ambitions are as low as ever. (By Jonathan Guilford)

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