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If GameStop earnings looked weak to you, you’re not who GameStop really cares about

Often, when a public company really underwhelms Wall Street estimates on a key metric for a quarterly earnings report, the executives of that company will use the earnings call with analysts to explain away what happened lest they risk the wrath of investors primed to get what they want.

But in 2021, the year of meme stocks, that is no longer the case. Just ask The Mother Meme: GameStop GME, -2.34%.

GameStop on Wednesday reported that it lost $105.4 million — or $1.39 a share — while Wall Street was looking for something more in the 52-cents range, especially since GameStop only lost 29 cents a share in 2020’s third quarter.

Predictably, GameStop stock fell steeply in Wednesday’s after-hours trading as Wall Street once again shook its head at what is going on at the videogame retailer.

But on social media, where GameStop stock’s most important investor base operates, the results were met with excitement as retail investors devoted to the stock and its guru chairman Ryan Cohen divined positive results in the metrics they actually care about.

To start, GameStop also disclosed that sales rose to $1.3 billion, easily beating Wall Street’s consensus estimate of $1.19 billion, and chalking up at least some of that growth to “new and expanded brand relationships,” and some of the company’s biggest spending appears to be on growing its fulfillment operations to fuel its move from a brick-and-mortar operation to an e-commerce growth story.

These are what many of GameStop’s die-hard Reddit “Apes” delight in hearing from Cohen and his team, and they can eschew EPS since they remain hyper-focused on the long-term growth of the company and Cohen’s still-ethereal “master plan.”

And don’t just take our word for it. Retail investors continue to take their shares and lock them up in direct-registration systems with companies like Computershare CPU, +0.71% that keep investors from getting access and borrowing the shares to short them.

Between the notion of growing sales, more e-commerce operations and expanded partnerships with companies that provide GameStop increased access to the meme-y Promised Land of blockchain and Non-Fungible Tokens, GME fans could argue there was really no need for an informative earnings call — despite the stock falling 3% in after-hours trading.

And that’s kind of what investors got.

Once again, GameStop CEO Matt Furlong presided over a very brief call that did not include Cohen but did reference NFTs, blockchain and reinforced the company’s commitment to serving customers and shareholders.

Cohen’s mysterious plan, which has come under fire from some analysts and GameStop observers for months now, did — like Cohen — not materialize on Wednesday, but Cohen’s no-show and the brevity of the call did not disappoint Apes, who not only predicted it on Reddit but supported it as part of the plan.

“There will be a bunch of FUD [fear, uncertainty, and doubt] posts saying ‘We need to know a plan in the conference call tomorrow/today, they owe it to us,’” read one post on GameStop subreddit r/Superstonk. “They don’t owe you shit. Let them continue executing. You just BUY and HOLD and DRS.”

In general, GameStop Apes were thrilled with an earnings report that most Wall Street analysts will find disappointing — but once again the analysts are failing to realize that GameStop doesn’t see traditional Wall Street as its audience, and is even growing to see it as its opposition.

But one thing that even GameStop execs might have to spend a little more time explaining is a curious disclosure at the end of its earnings filing.

Citing an SEC investigation started in May into the January short squeeze on GameStop stock that appeared to be closed after the SEC released its report in October, the company stated Wednesday in its filing that the SEC asked for additional documents “on August 25, 2021” and that “We are in the process of producing the documents and have been and intend to continue cooperating fully with the SEC Staff regarding this matter.”

In the end, GameStop’s CEO Furlong stuck to the loose script of growth that appealed to his real audience, telling listeners on the call — there were no questions asked — that GameStop is now on the quest to find “scale” that it will use to keep driving growth and change.

And if you’re the kind of investor who might have come away from that kind of talk wondering what that even means when your losses are widening, and when GameStop is going to stop acting like a meme stock and start acting like the kind of company Wall Street wants to invest in, we can help.

The answers are: Why would it do either when the stock is up more than 900% in 2021? And also, GameStop isn’t talking to you.

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