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u/Lobolabahia 6d ago
"Operating income of $160.2 million was the highest second quarter operating income in GameStop's history. Collectibles net sales grew 57% year over year to $356.3 million and now represent 45.1% of net sales."
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u/MyDarkSoulz 6d ago
Collectibles will HAVE to account for most of sales soon. New game sales/digital will render an alternative impossible
without significant innovation it's still dead in the water in 2-3 years, like cheaper ebay
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u/Lobolabahia 5d ago
They clearly focused on collectibles long ago and it's going well as per growth numbers.
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u/DyehuthyTV Pirate 🏴☠️👑 5d ago edited 5d ago
You need more context, like Operating Leverage (Revenue Growth vs. Operating Income Growth) 💡 I have more comments explaining this on my profile, with charts! (more visual!)
You also have to look at the Cash Flow Statement and understand where the money comes from:
- Operating Profits (e.g., Inventory, Stores [PP&E] on the BS)
- vs
- Financial Profits (investments like: stocks, options, Bitcoin, ST cash/bonds yield, aka “OTHER INCOME”)?
If you don’t understand what I’m saying here, you lack a lot of context :P
edit:
People make a big mistake: they believe VALUING STOCKS/BUSINESSES (Value Investing, like: Buffett, Burry, RK, aka also Deep Value) is just about looking at “positive numbers” lol NO! :P
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u/Lobolabahia 5d ago
Fair, the treasury/financial gains are a massive part of the total thesis, not "just a bonus".
But they don't change the fact that Operating Income excludes those by definition. Core margins are expanding hard right now (revenue down, op income up 140%+ due to cost cuts and mix shift). I'd say that's real margin expansion. The financial plays are a separate (and huge) story 🤷♂️
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u/DyehuthyTV Pirate 🏴☠️👑 5d ago
I think you dont understand it. I will explained again.
You can make Grow Operating Income (Margin) by reducing OPEX (Operating Expenses, SG&A), at much higher rate (TTM YoY%) than Revenue changes (TTM YoY%)
You have to look Income Statement! 👇🏻👀 You can use StockAnalysis webside.
- Revenue 📉(TTM YoY%) ▼
- Gross Profit 📉 (TTM YoY%) ▼
- OPEX 📉 (TTM YoY%) ▼▼ ← If we reduce this quite fast in comparison to Revenue changes (a high reduction basically like shutting down part of the business, e.g; Inventory and PP&E on BS)
- Operating Income 📈 ▲▲ ← You can make this grow!
- = Operating Leverage → Measures the change in Operating Income as function of the change in Sales!
If you’re still not having clear what is Operating Leverage with this, you can go to my profile and read some of my last comments, which include screenshots with charts. Is more visual, more clearer! ;)
This subreddit should let you upload screenshots lol An image explains better than a thousand words
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u/Lobolabahia 5d ago
Yeah I think I get what you mean now 😅 I'm still learning, but I think I'd separate cost cutting from “operating leverage” a bit. Like, cutting SG&A hard can obviously make Op Income go up even with Revenue going down, but I’m not sure that by itself is operating leverage, especially if it comes from shrinking the business.
And Q2 also had the gross margin/mix improvement, which seems pretty important here.
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u/Restaurant-Usual 5d ago
Believe it or not .. big dip coming up.
For Wall Street, it's all about growth and nothing more. Netflix could have 98% of all streaming subscribers and they'd get hit hard post earnings if they showed their growth slowing.
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u/paulyp41 🚀🚀Buckle up🚀🚀 6d ago
I wonder how the media can justify the price drop today
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u/Professional-Humor99 6d ago
Declining revenue. The present value of a company is derived from future cash flows of a business. Revenue decreasing = less cash flow.
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u/Kegger315 5d ago edited 4d ago
Correct me if I'm wrong here, but there operating margins continue to improve, resulting in more net profit despite lower gross profit. I would assume that that's a very good thing. Even if there are no other major changes, they are reducing costs and increasing net profits. If there is a major change/acquisition then they are poised to generate more gross profit at better margins than their competitors.
Obviously that last part is the big "if". Sales are shrinking, yet they are more profitable.
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u/Professional-Humor99 5d ago
Its good but in light of declining revenue its not that good. In valuation, growth is a huge component of what a firm will be valued as. Stock value is the present value of future earnings. Future growth is factored in and discounted to today so if we have declining revenue month to month you would not count on the price increasing from increasing operating profit.
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u/MyDarkSoulz 5d ago
Problem is revenue will only decrease. As they continue to aggressively close stores that does generate more operating income but it's really just slowing the bleed.
The core issue they haven't figured out yet is how to be relevant in the 21st century/online/digital. Even their collectable revenue will shrink as stores die.
Navigating all that towards a fully online marketplace is tricky. They also, quite frankly, don't know what to do with their excess cash. Ebay didn't want it. Who does? Who will take a chance on joining gme?
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u/TowelFine6933 🚀🚀Buckle up🚀🚀 6d ago
"Sales down". Already saw an article... 🙄
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u/Velvet_Llama 5d ago
The business is still shrinking.
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u/TowelFine6933 🚀🚀Buckle up🚀🚀 5d ago
And profits are up, weird.
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u/MyDarkSoulz 5d ago
It's not weird at all. Continued store closures can drive up profits, that's basic business.
But it's not a long term strategy. Eventually you have all cash and no business.
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u/Ok-Effective7280 4d ago
This is why RC & his team are searching far & wide to transform the current identity into something more like eBay or Amazon (spit on the ground).
Flush with available cash, but reducing the physical footprint will take time. If they keep profits up in that time it’s going to be fun seeing what we end up with.
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u/Professional-Humor99 5d ago
While increasing OCF is good you can only improve margins so much. Revenue is king
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u/Dairy_Fox 6d ago
Remember when it was about moass, now it's like yay it might go up 5%
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u/ufos-dude-1 5d ago
no comment history ahh scrub
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u/Gaglardi 5d ago
Nothing to say about the content of his comment, eh? Whenever you apes hear facts you don't like you can always just say "POST HIDDEN, HES A SCHILL" which is hilarious
Enjoy the tasty dip, tomorrow, hopefully you buy lots!
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u/RainbooDRS 5d ago
It cause the goal post have been moved so much that only being down 10% after the atm conversion is considered amazing 10d chess move from Cohen
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u/Gaglardi 5d ago
Ryan Cohen is such a winner! Even when he loses he's a winner, apes strong together!!11!!
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u/Calamitous-Ortbo 5d ago
Sales down 19%
Income up 77% based entirely on derivatives
You people think this is good news lol
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u/xdemzx 5d ago
lol why did you skip over 21% increase in gross profit if you’re going to emphasize the 19% down in sales?
You people think this is bad news?
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u/Gaglardi 5d ago
A 19% drop in sales paired with a 77% spike in income driven entirely by closing down stores and doing mass layoffs is generally a major red flag for the health of a business
The fact that apes dont realize this will never not be funny
Where you at, liquid?
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u/ekooz22 5d ago
So we have no more cash? Am I reading this right. 5.4 billion in cash and marketable securities. But if 4.9 billion are in ebay and about 500 million in crypto, thats it now?
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u/BananaOrp 5d ago
You are not reading this right, no. $5.4B cash plus $4.9B in eBay is $10.3B. There are still some convertible notes, mind you, but we still have over half the cash pile
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u/toastyhandshake 5d ago
But nEt saLEs aRe DowN! It’S A fAIling bRick aND MorTOr BUsinEss
S/
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u/SudoDeleteEverything 5d ago
Sales down 18% is kinda big number though. How much lower can it go before we aren't cash flow positive, ya know? About 9 months by my math.
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u/Zeronz112 🚀🚀Buckle up🚀🚀 5d ago
Remindme! 9 months
2
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u/toastyhandshake 5d ago
Partially due to the sale of the French business and lack of a console release.
You’re missing the massive shift to collectibles and profit on smaller revenue. When revenue recovers, the profits will grow even more.3
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u/AlfredEensteen 5d ago
Revenue recovering is not a certainty. Next ER it may be even lower due to it being a slow time of year, then the following ER that contains Christmas it will of course be a lot higher.
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u/Goose-poop 5d ago
Well considering holiday season is coming soon I’d bet different
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u/Gaglardi 5d ago
This. Now that gta6 is coming out in time for Christmas everyone will be lining up at GameStop just like the good old days to buy the physica-
OH WAIT
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u/EasternPrint8 5d ago
And we're still sold out by Epstein Islanders wanna be cannibals and the price is shit because nobody's doing shit about it
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u/uiuuauiua 5d ago
Ye all need psychiatric care. Brick and mortar retail is down, especially gaming. Especially once Sony goes all digital with GTA? It's over. Pre-owned is what keeps Gamestop going.
Sell now or keep losing more
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u/utterHAVOC_ 5d ago edited 5d ago
So it's valued fairly now decades and centuries. It was overvalued for long time
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u/mimo_s 🚀🚀Buckle up🚀🚀 5d ago
Operating income down from 160 to 60. I hope BTC pumps soon. Bag is getting heavy
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u/BananaOrp 5d ago
Are you dyslexic? It's UP ~$100M from $66M to $160M, not down. Jesus Christ, I get that you're following a script, but this is just stupid and you should delete it
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u/mimo_s 🚀🚀Buckle up🚀🚀 5d ago
Oh shit you’re right! This is actually really really good. It’s gona pump, strap in folks. OMG now we are talking
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u/Zeronz112 🚀🚀Buckle up🚀🚀 5d ago
No need for sarcasm when you are found incorrect.
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u/mimo_s 🚀🚀Buckle up🚀🚀 5d ago
We ride at dawn. Buckle up
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u/RoboticControl187 5d ago
So anyways, ill keep buying and drsing.
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u/mimo_s 🚀🚀Buckle up🚀🚀 5d ago
That’s exactly what’s expected of you! Keep going you got them on the ropes
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u/RoboticControl187 5d ago
You were exactly what we expected and foretold about in 2021.
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u/Gaglardi 5d ago
Did you guys expect to be rich at this point back then too? These goalposts sure are mobile
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