GameStop Stock Volatility Ramps Up Ahead of Q1 Earnings – Kiplinger’s Personal Finance

GameStop (GME, $139.66) has been in focus recently as shares of video game retailer have been volatile. Specifically, shares are up almost 72% from their mid-May bottom near $81 (though they’re still down 10.6% on a year-to-date basis).

While not nearly the parabolic moves GME made when it earned its status as a meme stock back in early 2021, they are notable nonetheless.

And GME will remain in the limelight thanks to its spot on this week’s earnings calendar. GameStop will unveil its first-quarter results after Wednesday’s close. 

The company reported a quarterly loss in its last report, and analysts don’t seem too upbeat this time around. 

Wedbush analyst Michael Pachter has an Underperform (Sell) rating on GME and says he’s “hard-pressed” to find any potential drivers of revenue growth. 

“GameStop expanded its product offering to PC games and accessories, and we expect this category to add as much as $300 to $500 million in annual sales in the next few years, but we do not believe that the category will comprise a sizable portion of overall revenue,” Pachter says.

Consensus estimates are for GameStop to report a per-share loss of $1.45 – much wider than the 45 cents per-share loss it recorded in the year-ago period. Revenue, meanwhile, is expected to be up a modest 3.1% year-over-year (YoY) to $1.3 billion.

Salesforce Demand Likely Slowing, Says Analyst

Like so many other tech stocks, Salesforce (CRM, $161.45) has had a rough year on the charts. Shares are down more than 36% so far in 2022 – second only to Boeing (BA) in terms of worst year-to-date return among all the Dow Jones stocks.

But off the charts, CRM has “run into challenges,” too, says Oppenheimer analyst Brian Schwartz. 

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“Salesforce is likely experiencing slowing demand, mostly from the macro headwinds but also partly from execution,” Schwartz explains. This, combined with worsening forex headwinds, “points to good but not great bookings and to Salesforce maintaining its constant-currency guidance.”

Still, the analyst has an Outperform (Buy) rating on CRM, saying valuation remains reasonable when looking at the company’s free cash flow (FCF) multiple against future FCF growth estimates. As such, “Longer-term investors have a unique opportunity to buy CRM’s growth at a reasonable multiple,” Schwartz adds.

For Salesforce’s first-quarter earnings report, due out after Tuesday’s close, analysts, on average, are calling for earnings of 94 cents per share (-22.3% YoY) and revenue of $7.4 billion (+23.3% YoY).

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Source: https://www.kiplinger.com/investing/stocks/604744/gamestop-stock-volatility-ramps-up-ahead-of-q1-earnings

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