Can GameStop Stock Bounce Back After Last Week's 9% Drop?

They're running out of cheat codes at GameStop (NYSE: GME). Shares of the leading retailer specializing in video games tumbled 8.6% last week, hitting their lowest levels in five years, after the company posted disappointing financial results.

Total global sales rose 3.4% to $1.69 billion, as healthy inroads internationally and strong hardware sales offset negative domestic comps weakness in new software and pre-owned games and gear. Analysts were settling for just $1.62 billion on the top line.

Profitability wasn't as kind. Those familiar with the model know that it's usually a bad sign when the new hardware category is leading the sales charge, as it's where the chain is afforded the smallest markups. New software and, more importantly, pre-owned sales are where the chunkier margins can be found, and those categories declined 3% and 8%, respectively. GameStop's earnings adjusted for a one-time gain clocked in at $0.15 a share, nearly half the $0.27 a share it scored a year earlier. Analysts were holding out for adjusted income of $0.16 a share, making this a rare miss for the small-box retailer.

Source: Fool.com