GameStop's business struggles seem to be continuing with a new round of "big" layoffs which started in early December, according to a new report. The allegations of workforce cutbacks might signal yet another troublesome month for the company, arriving mere days after GameStop denied massive data breach claims.
GameStop is scheduled to publish its Q3 2022 financials after the market closes on December 7. Wall Street anticipates negative earnings per share in the ballpark of 28 cents, which would amount to a net loss of over $21 million. But such a figure would still be a notable improvement for GameStop, who lost $109 million in the previous quarter, especially considering how its third quarters have historically been responsible for much larger cash burns. For example, GameStop lost $105 million in Q3 2021.
Axios reports that GameStop started another wave of layoffs in early December, citing company insiders. While the scale of the cutbacks remains unclear, at least half a dozen engineers working on GameStop's wallet for cryptocurrency and NFTs have been let go, sources claim. No fewer than eight former employees publicly testified to being let go via LinkedIn as of December 6. One current software lead described the move as a "big round of layoffs" in another LinkedIn post, adding that the cutbacks are still ongoing and appear to be focused on the firm's e-commerce department, where they continue to impact both product staffers and engineers.
More details on the matter—including the official confirmation of the layoffs—are likely to follow during GameStop's December 7 earnings call with investors and analysts. The company announced its last round of workforce cutbacks back in July, when it also fired its Chief Financial Officer Mike Recupero, replacing him with Chief Accounting Officer Diana Jajeh. In the grand scheme of things, GameStop is still attempting to reinvent itself as a technology company through its blockchain-based and online retail initiatives, all in a bid to pivot away from the long-declining brick-and-mortar business.
Despite recent struggles, GameStop is projected to continue on its road to recovery over the final quarter of its current fiscal year, not least because the holiday season is traditionally the most lucrative period of the year for the video game industry, on the whole. The fact that GameStop managed to replenish its PS5 stock just in time for the holidays is another positive indicator for the company, as Sony's latest gaming console is once again expected to enjoy a massive year-end demand surge.
Source: Axios, Seeking Alpha, Daniel Williams (LinkedIn), Blake Jackson (LinkedIn)