When Can We Expect A Profit From GameStop Corp. (NYSE:GME)?

With the business potentially at an important milestone, we thought we'd take a closer look at GameStop Corp.'s (NYSE:GME) future prospects. GameStop Corp., a specialty retailer, provides games and entertainment products through its e-commerce properties and various stores in the United States, Canada, Australia, and Europe. The US$13b market-cap company’s loss lessened since it announced a US$215m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$67m, as it approaches breakeven. As path to profitability is the topic on GameStop's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for GameStop

GameStop is bordering on breakeven, according to the 4 American Specialty Retail analysts. They expect the company to post a final loss in 2022, before turning a profit of US$35m in 2023. So, the company is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 119% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for GameStop given that this is a high-level summary, however, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 2.6% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of GameStop which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at GameStop, take a look at GameStop's company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Historical Track Record: What has GameStop's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on GameStop's board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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