Why GameStop Stock Is Rocketing Higher

GameStop Corp GME shares are soaring Wednesday after the company turned in a profitable quarter for the first time in two years.

What Happened: GameStop reported fourth-quarter revenue of $2.23 billion, which beat average analyst estimates of $2.18 billion. 

The company reported adjusted earnings of 16 cents per share, which easily beat analyst expectations for a loss of 13 cents per share. The positive earnings surprise marks the first time GameStop has reported a profitable quarter since 2021, according to Benzinga Pro

GameStop ended the fourth quarter with cash and equivalents of $1.39 billion and closed the period with an inventory position of $682.9 million. 

The retailer said it continues to prioritize its collectibles category and highlighted recent cost-cutting initiatives, infrastructure upgrades and its go-forward strategy focused on efficiency, profitability and pragmatic growth.

See Also: Trading Strategies For GameStop Stonk After Q4 Earnings

GameStop is trending across various social platforms amid the surge in shares. It was the top trending ticker on Stocktwits at the time of writing and it was the most mentioned name on Reddit's r/wallstreetbets over the last 24 hours.

GameStop became popular among the retail crowd in the wake of a historic short squeeze in early 2021. The stock is still pretty heavily shorted with 21.24% of the float currently sold short, according to data from Benzinga Pro.

Following the report late Tuesday, Jim Cramer took to Twitter to note that he expects the earnings beat to spark increased short covering in the name. It appears some of Wednesday's move is a result of short sellers exiting their positions. 

GME Price Action: GameStop has a 52-week high of $49.76 and a 52-week low of $15.41.

The stock was up 47.9% at $26.09 at time of publication, according to Benzinga Pro.

Photo: JJBers from Flickr.

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