GameStop (GME) stock price falls over 20% after missing on profit and sales estimates, analyst downgrades to ‘Underperform”

Shares of GameStop (NYSE: GME) plunged more than 20% today after the company reported a miss on profit and sales estimates and declined to offer more details about the outlook for 2021. 

Fundamental analysis: More leadership changes announced

GameStop made a profit of $1.34 per share in the fourth-quarter to miss on the $1.35 that the surveyed market analysts were calling. Sales for the quarter were reported at $2.12 billion to miss on the Wall Street estimates of $2.21 billion.

The company is working to accelerate the shift to digital sales after Q4 sales rose 175% while same-store sales gained 6.5%

Investors were also not happy that the company declined to offer guidance for this quarter and for the full-year, except for the fact that February comparable store sales gained 23%.

GameStop also said it hired Jenna Owens for the role of Chief Operating Officer (COO). Owens is arriving from Amazon, where she acted as a director and general manager for Distribution and Multi-Channel Fulfillment.

Following last night’s results, Wedbush analyst Michael Pachter moved to downgrade the stock to “Underperform” from “Neutral” due to high market valuation. 

Technical analysis: Breaking key NT support

GameStop stock price has plunged over 20% to trade below the $150 mark for the first time in nearly 3 weeks. The stock is now down over 27% to trim monthly gains to below 45%. GME stock lost almost 70% in February.

The price action is now testing, and what it looks like, breaking below the key near-term support of 61.8% Fibonacci retracement line near $157.00. The next support is located in the low $110s where retail investors are likely waiting to buy GME stock.

Summary

GameStop reported weaker-than-expected quarterly results that resulted in the stock trading over 20% lower today.