CNBC’s Jim Cramer said Wednesday that GameStop’s turnaround story is promising, despite believing the company remains overvalued following its latest quarterly report.
“I am a lot more devout than yesterday, but I also think that if you buy the stock up here you will take control of your life,” said the host of “Mad Money”. “Let it drop to the middle double-digit numbers and I’ll get back to you.”
The competitive video game retailer’s shares fell 34% on Wednesday, a day after the company released quarterly results that missed analysts’ income statement estimates.
The company reported earnings per share of $ 1.34 and revenue of $ 2.1 billion for the quarter, a decrease of 3% year over year. According to FactSet, analysts were expecting $ 1.35 and $ 2.2 billion. Revenue declined 21% for the full fiscal year ended Jan. 30 as the company suffered losses due to Covid-19 disruptions.
Cramer said results were “about as good as could reasonably have been expected,” though he said the stock could have rallied on the report if it had traded at $ 30 or less apiece, one Fraction of their three-digit share price.
Cramer also criticized management for lacking guidance or details on GameStop’s transformation plan. The company has reduced the number of its branches and is expected to work on a plan to improve its digital operations and be competitive in the internet age.
“As long as it is in three digits, it acts as if the turnaround has already taken place,” he said. “If you buy this stock here, you are betting that Ryan Cohen’s plan will be hugely successful. This seems like a stretch since we don’t even know what the plan is.”
GameStop’s report was the first since Reddit traders short-squeezed the stock in January. GameStop shares rose nearly 2,000% in a week.
The stock closed at $ 120.30 on Wednesday, a 75% decline from its high during the high-profile Reddit rally.
