Reddit traders making bank by squeezing GameStop shorts don’t appear to be taking their profits to the retailer’s stores for a new Sony PS5 or Microsoft XBox Series X console.
Weekly store traffic for GameStop declined at an accelerating rate in January, according to new research out of location data analysis firm Placer.ai. For the week-ended Jan. 18, foot traffic to GameStop’s stores plunged 20.3%, likely as the retailer deals with tepid mall traffic amidst the COVID-19 pandemic and continues to battle market share losses to Amazon and Best Buy (and others).
GameStop operates 5,000 stores around the world.
In 2020, so far, Placer.ai data shows GameStop’s average monthly store traffic dropped 28%, after a 3% decline in 2019. Placer.ai says it analyzed data from 30 million consumer devices to develop its traffic estimates on GameStop.
Suffice it to say, the reality surrounding GameStop’s fundamentals (plunging sales and profits these past five years) remain in the rearview mirror as retail traders continue to battle Wall Street pros.
In the last five sessions, GameStop’s stock has gained 228% even with a nearly 30% plunge on Monday. The stock is up close to 1,600% year-to-date in one of the most epic short squeezes in recent memory.
But fundamentals could come back into play ahead of GameStop’s fourth quarter earnings release in late March (and hit the stock). The company did all but explicitly say business remains mixed at best in a Jan. 11 pre-announcement.
“Total sales declined 3.1% driven by an 11% decrease in the company’s store base due to its planned de-densification strategy, temporary store closures around the world due to government mandates and lower store traffic, particularly later in December, due to the significant impacts of COVID-19. The Company believes the industry-wide traffic decline during the Holiday period adversely impacted comparable sales for the nine-week period in the high single-digit to low double-digit percentage point range. In addition, significant worldwide supply chain constraints impacted the ability to distribute products to customers across all sales channels,” GameStop noted.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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