GameStop Under SEC Scrutiny With Stock Up 1,500% in 2021

GameStop June 10 disclosed it is being investigated by federal regulators from the Securities Exchange Commission — the result of months-long stock volatility that has seen the video game retailer’s shares skyrocket 1,500% in value in 2021.

The retailer said it is reviewing the regulatory request, producing the requested documents and intends to cooperate fully with the SEC.

“This inquiry is not expected to adversely impact us,” GameStop said in a statement.

After raising almost $552 million from the issuance of 3.5 million shares in April, GameStop said it plans to issue another 5 million shares in the near future. The stock, along with AMC Entertainment’s, has become fodder for individual traders fueled by social media and crowdsourced stock moves. Company shares closed June 9 up over $300 a share from little more than $4 per share last July.

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“The trading probe is definitely a big red flag,” David Trainer, CEO of research firm New Constructs, said in a media interview. Trainer characterized the SEC probe as “the needle that can bust the balloon of the stock’s valuation.”

Wedbush Securities media analyst Michael Pachter contends the regulatory investigation is normal in light of the stock jump. But the analyst believes the June 10 morning decline in share price has more to do with the new stock sale.

“We think that the sell-off had little to do with the fundamentals and everything to do with the company’s failure to reveal its strategy,” Pachter wrote in a June 10 note.

Regardless, Texas-based GameStop saw first-quarter sales (ended May 1) increase 25% to $1.27 billion, from revenue of $1 billion in the previous-year period. Net loss narrowed nearly 60% to $66.8 million, from a net loss of $165.7 million a year earlier.

Speaking on his last call as CEO, George Sherman said the increased revenue came despite the closure of 118 under-performing stores. GameStop still operates nearly 4,700 stores worldwide.

Former Amazon executive Matt Furlong becomes GameStop’s new CEO on June 21.

Furlong’s arrival, along with fellow Amazon executive Mike Recupero as new CFO, underlines the fact that GameStop’s the future is online and with ecommerce. The chain is adding 700,000-square feet to a fulfillment facility in York, Pennsylvania.

“This new distribution center, which is expected to be operational by the fourth quarter of this year, will enhance our order fulfillment capabilities on the East Coast,” Sherman said on the June 9 call.

 

Hulu Adding Access to ESPN+, Exclusive 20th Century Movies, 5th Season of ‘The Handmaid’s Tale,’ SEC College Football; Hulu With Live TV Tops 4 Million Subs

SVOD pioneer Hulu will offer its 38.8 million subscriber access to the ESPN+ sports streaming service in 2021. Hulu’s online TV platform, Hulu With Live TV, now tops 4 million subscribers, making it the top online TV platform and fifth-largest pay-TV operator in the U.S.

“Users can sign up or enjoy existing ESPN+ subscriptions without ever having to leave the Hulu app,” Hulu president Kelly Campbell said on Disney’s Investor Day Dec. 10. Campbell said the SVOD platform in 2021 would bow original movies from 20th Century Studios and Searchlight. The platform also greenlighted a fifth season of original hit series “The Handmaid’s Tale.”

ESPN+, which had 11.5 million subscribers as of Dec. 2, will begin streaming select Southeastern Conference college football games in 2021. ABC TV (and ESPN+) will become the exclusive SEC broadcasters in 2024 for 10 years, including the SEC Championship. The SEC, which is currently broadcast on CBS and ESPN, includes perennial national champion contender University of Alabama, in addition to the University of Georgia, University of Florida and Louisiana State University, among other schools.

“This is a significant day for the Southeastern Conference and for the future of our member institutions. Our agreement with ESPN will greatly enhance our ability to support our student-athletes in the years ahead and to further enrich the game day experience for SEC fans around the world,” Greg Sankey, SEC Commissioner, said in a statement. “One of our primary goals was to improve the television scheduling process in ways that will benefit our students, coaches, alumni and fans. By working in collaboration with ESPN, we were able to secure an agreement that includes more lead time for many game time announcements, and in many ways modernizes the college football scheduling process.”

Netflix Breaks Out Subs by Region, Sees Higher Revenue Growth Outside U.S.

Netflix Dec. 16 for the first time broke out revenue and subscriber numbers for three international regions in a filing with the Securities and Exchange Commission.

The numbers show higher revenue growth rates outside the United States and Canada over the past three years.

In those two countries, according to an 8K filing, Netflix said its subscription streaming revenue was up nearly 21% for the first nine months of 2019 compared to the comparable period last year, rising to nearly $7.4 billion from $6.12 billion.

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During that same period, SVOD revenue in the Europe, Middle East and Africa region grew 39%, to $3.98 billion from $2.87 billion. Revenue was up 57% in Asia-Pacific, to $1.05 billion in the first nine months of 2019 from $668 million in the first nine months of 2018, and 27% in Latin America, to $2.05 billion from $1.67 billion.

Comparing SVOD revenue for the first nine months of 2019 with the comparable period two years ago, the United States saw gains of 51%, compared to revenue hikes of 79% in Latin America, 144% in Europe, the Middle East and Africa, and 163% in Asia Pacific.

At the end of September 2019, Netflix had 67.11 million paid subscribers in the United States and Canada; 47.36 million in Europe, the Middle East and Africa; 29.38 million in Latin America; and 14.49 million in Asia.

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The company says that beginning in the fourth quarter, it will report financials for the same four regions. Netflix previously reported financials in just two categories, the United States and Canada and globally.

 

Helios and Matheson Files With SEC for MoviePass Spinoff

Helios and Matheson Analytics announced Jan. 17 that it has filed confidentially with the Securities and Exchange Commission to spin off its theatrical ticket subscription service MoviePass as a new subsidiary, MoviePass Entertainment Holdings.

Helios will spin off shares by listing on Nasdaq or an alternative exchange and distribute some of the shares as a dividend to shareholders as of a record date yet to be selected, according the announcement.

The company will retain a controlling stake in MoviePass.