How Will GameStop Traders React To Earnings?

GameStop (GME) is expected to report earnings today after market close. The whisper number is $1.63, five cents ahead of the analysts' estimates and showing confidence from the WhisperNumber community.

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A year ago the company reported earnings of $2.02, nine cents ahead of the whisper number. GameStop has a 50% positive surprise history (having topped the whisper in 16 of the 32 earnings reports for which we have data).

Earnings history:

  •  Beat whisper:  16 qtrs
  •  Met whisper: 2 qtrs
  •  Missed whisper: 14 qtrs

Our primary focus is on post earnings price movement. Knowing how likely a stock's price will move following an earnings report can help you determine the best action to take (long or short). In other words, we analyze what happens when the company beats or misses the whisper number expectation.

The table below indicates the average post earnings price movement within a one and thirty trading day timeframe:

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The strongest price movement of +6.6% comes within thirty trading days when the company reports earnings that beat the whisper number, and +3.4% within five trading days when the company reports earnings that miss the whisper number. The overall average post earnings price move is 'positive' (beat the whisper number and see strength, miss and see strength) when the company reports earnings.

The table below indicates the most recent earnings reports and short-term price reaction:

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The company has reported earnings ahead of the whisper number in two of the past four quarters with a whisper number. In the comparable quarter last year the company reported earnings nine cents ahead of the whisper number. Following that report, the stock realized a 7.2% gain in five trading days. Last quarter the company reported earnings seven cents ahead of the whisper number. Following that report, the stock realized a 19.3% gain in thirty trading days. Overall historical data indicates the company to be (on average within thirty trading days) a 'positive' price reactor when the company reports earnings.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not ...

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Danny Straus 5 years ago Member's comment

I didn't have a great opinion on $GME until recently. They've been winning me over.