The US remains relatively calm this week, in part due to the bank holiday on Monday. This week sees quarterly updates on Kroger, cybersecurity company Zscaler, meme stock GameStop and AI favorite C3.ai.
GameStop Stock: Preview of Q2 Results
GameStop still has a big task ahead of it. The company needs to get out of the red, but that’s all the more difficult when you’re not growing.
Revenue for the second quarter is expected to increase just 0.3% to $1.139 billion. The main problem is still the demand for hardware. Many gamers have upgraded to the latest consoles while stuck at home during the pandemic, and the entire industry is increasingly shifting to a digital world that is less reliant on consoles. Sales of collectibles will also decline for the second quarter in a row. The bright spot is the software, because the demand for games is still more stable.
While GameStop is still making losses, it’s on the right track. The net loss is estimated at $49.4 million, which would be less than half of last year’s loss. This is due to a greater focus on costs and significantly lower spending. GameStop currently spends less than $10 million quarterly on capital expenditures, but it’s still burning cash and draining its treasury, which was $1.3 billion at the end of April.
GameStop stock has underperformed this year, but the stock just posted its best weekly performance after six consecutive negative weeks.
C3.ai Stock: Preview of Quarterly Figures
C3.ai shares suffered from a broader sell-off in August, which saw AI stocks face a reality check for the first time since the tech hype soared in value earlier this year. The stock is trading nearly three times where it started 2023, but is down about 33% from the peak we saw in June.
So the bar has come down since early August as ratings and enthusiasm for AI have softened, but ahead of results it’s still high. The company has garnered a lot of buzz with its prospects, but pressure is mounting on the company to meet expectations. For the first quarter of the new fiscal year, revenue is forecast to increase 9.6% to $71.6 million — a relatively weak number for what it says is a small but fast-growing company operating in the hottest industry Wall Street operates. Sales increased by just 0.1% in the last quarter! Investors will expect revenue growth to accelerate from this very low base going forward.
C3.ai generated a rare free cash flow positive last quarter, but it will consume nearly $32 million this quarter. Adjusted loss per share is expected to be $0.17, up from a loss of $0.12 a year ago.
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