Yahoo Finance’s Julie Hyman, Brian Sozzi, Myles Udland, and Emily McCormick preview GameStop’s first quarter earnings report.

Video Transcript

JULIE HYMAN: And GameStop reports its earnings after the close of trading, or, should I say, its losses after the close of trading. The company also is holding a shareholder meeting today at 11 AM at which Ryan Cohen is expected to be elected chairman of the company.

Our Emily McCormick looking into the financials for this company. Emily, what are we expecting?

EMILY MCCORMICK: Well, Julie, as you mentioned, the original poster child for the meme stock trade is reporting its fiscal first quarter results after the bell today. Now we should mention that much of the rally that we've seen in GameStop shares so far this year has not necessarily been tied to fundamental news, like earnings results, or quarterly results, we should say, so much as the popularity of the company on the Reddit forum Wall Street Bets.

But tonight's report will still offer an update on GameStop's business following an almost 1,500% rally so far in 2021. And that includes an 86% surge in share prices over the past one month alone.

Now GameStop is expected to post a fourth loss over the past five quarters, and this is for the three months ended in April. But that said, we are expected to see revenue grow 15%, which would mark the first year-on-year increase for the company in nearly three years.

We should note, though, that last quarter, GameStop did decline to provide guidance for this year or for the current quarter that it will be reporting. And at the time, it did report fourth quarter adjusted earnings per share, or losses per share, I should say, revenue, and comparable sales that each missed estimates. So these metrics were covered from their worst points during the pandemic.

Now we should note as well that as we've been talking a lot about on the program here, the meme stock rally really has broadened out in this latest wave we've been seeing over the past month. AMC Entertainment really has been one of the focal points of this latest rally. The company actually overtook GameStop's market capitalization last week. And just yesterday and into this morning, we are seeing a cohort of new stocks, including Wendy's, Wish, and Clover Health also seeing massive rallies.

Now also do want to highlight that GameStop is still a pretty heavily shorted stock, although short interest has come down considerably compared to the beginning of 2021. Just to highlight a couple of metrics, we have short interest in GameStop totaling just over $3 billion as of yesterday's close. And that comprised a 19% short percentage of float. And short sellers were down by about $294 million last week, according to S3 data.

So again, still seeing some short interest here. Short sellers still getting burned, for the most part, when it comes to casting bets against rises in shares of GameStop. But as it comes to the company's fundamentals, we'll get an update on that front after market close today. Julie.