GameStop's Q4 Earnings Preview: 'Day Of Reckoning' Follows Stock's Wild WallStreetBets Ride

Video game retailer GameStop Corp. GME is scheduled to report earnings Tuesday afternoon, and it could prove to be a "day of reckoning," according to Circle Squared Alternative Investments CEO Jeff Sica.

Sounding The Alarm Bells: The "Reddit revolution" in early 2021 resulted in GameStop's stock being worth more than $30 billion, and it will certainly go down as a "major event" in the history books.

For the first time since the fiasco, GameStop's management has to come out and address the stock price after "hiding in the tall grass," Sica said on Fox Business.

Management also needs to communicate to investors its plan to justify its $13-billion valuation, the pro investor said.

See also: How‌ ‌to‌ ‌Buy‌ ‌GameStop‌ ‌(GME)‌ ‌Stock‌

The company has "such a long way to go" to turn itself around, regardless of the level of expertise that sits on its board, Sica said. 

"What baffles me is there is still people who own this stock at $200 a share." 

Other experts disagree with what Sica has to say.

For example, GMEdd.com co-proprietor Rod Alzmann said as a guest on Benzinga's "Power Hour" show on March 10 that at $250, shares of GameStop are trading at a forward price to sales ratio of around three, and this isn't "on its face crazy," as it implies a discount to the overall S&P 500.

Wall Street's Expectations: Wall Street analysts expect GameStop to earn $1.35 per share on revenue of roughly $2.21 billion. In the same quarter a year ago, GameStop earned $1.27 per share on revenue of $2.19 billion.

Telsey Advisory Group analyst Joe Feldman told The Wall Street Journal that GameStop's fourth quarter is "generally their money making quarter."

Yet management already cautioned investors that sales were lower by 3.1% for the nine-week holiday period that ended on Jan. 2.

GameStop's management said in its third-quarter report on Dec. 8 that it saw a "positive start to the fourth fiscal quarter following the launch of the long-awaited next generation of video game consoles."

At that time, GameStop said it expected positive year-over-year sales growth in the fourth quarter and profitability.

This projection reflects the introduction of new consoles, elevated omnichannel capabilities and cost and efficiency initiatives, CEO George Sherman said.

Management didn't offer any specific financial guidance for the fourth quarter.

GME Price Action: GameStop shares were down 2.89% at $194.49 at the close Monday. 

Photo by Phillip Pessar via Wikimedia.