Gamestop shares rebound despite dismal results

STORY: A year on from its celebrated 2021 short squeeze saga, dismal results from meme stock darling GameStop couldn't keep its shares down Friday, after initially plunging almost 9% in early trading.

Shares of the video game retailer turned positive despite reporting a net loss for the fourth quarter, as it absorbed high costs from supply chain constraints and spent more on transitioning from the largely brick-and-mortar business to e-commerce.

On Thursday evening's earnings conference call, GameStop's CEO said the combination of supply chain issues and the ongoing effects of the global health crisis had a sizable impact on the holiday quarter, which is usually a strong one for the company as new Xboxes and PlayStations are launched and demand is high.

But component shortages and other supply chain issues, which hit video game console makers Sony and Microsoft, took a toll on GameStop's business.

While net sales did rise by 6%, Wedbush Securities analyst Michael Pachter highlighted that the company's gross profit fell almost 16% due to what he called "exceptionally poor gross margins."

Wedbush then cut its share price target for GameStop.

But investors pushed the most popular meme stock of them all higher, climbing nearly 7% at one point Friday morning.

Gamestop also said it intends to launch its marketplace for non-fungible tokens or NFTs by the end of the second quarter.