GameStop Layoffs 2024: What to Know About the Latest GME Job Cuts

Shares of this top meme stock are crumbling today after reporting earnings and more job cuts

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Everyone’s favorite meme stock, GameStop (NYSE:GME), is seeing plenty of selling pressure today. The company reported its fourth-quarter earnings, in which revenue slid 19% year-over-year, driving most of today’s 15% decline in GME stock.

However, investors are also paying close attention to the latest round of job cuts the company announced in a regulatory filing tied to this earnings release, in which an undisclosed number of jobs were axed in a bid to cut costs.

While most investor attention in this embattled video game retailer will continue to be on its numbers, it’s important to pay attention to what these job cuts signal. As a retail-focused business, layoffs could signal more store closures, leading to further revenue declines down the road. And given that these job cuts have reportedly already taken place, investors appear to be revising their forward outlooks downward following this print.

Let’s dive more into what to make of the company’s recent numbers and its move to cut its workforce further.

GME Stock Sinks on Earnings, Job Cuts

GameStop’s massive 2021 short squeeze seems like yesterday. Retail investors piled into the beaten-down video game retailer, taking the company’s valuation to levels many thought were unsustainable at the time.

That’s certainly proven to be the case. The company’s split-adjusted all-time high of more than $88 per share is a distant memory, with shares now trading around $13 per share at the time of writing. This is a company that’s increasingly being valued on its fundamentals, which aren’t looking to hot right now.

The company’s current workforce of around 8,000 full-time employees and between 13,000 and 18,000 part-time employees is certainly heavy, and there are a number of avenues the company has to cut costs to keep its cash burn in check. However, as mentioned, more layoffs are likely to mean more store closures over time. This is a company that’s gone from a capital-rich state of investment to one of aggressive cost-cutting. That’s not good for the growth narrative around this company.

Maybe there’s a value case that can be made at some point with GME stock. But if the company continues to lose $100 million or more each year, its existing cash pile may not last as long as many previously thought.

For me, GameStop remains a sell, until the company can show it’s truly turning the corner on revenue stability and earnings growth. It appears we’re a long way from that.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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