GameStop, the video game retailer at the center of a social-media driven investment frenzy, said it lost $215 million in the 12 months ended Jan. 30 as it dealt with pandemic-related shutdowns and moved to transform itself into a more online-focused company.
The company’s latest results, which fell short of Wall Street’s expectations, offered few positives to back up some investors’ belief that the struggling retailer is on track to turn its business around and perhaps justify its stock’s stunning run from around $20 a share at the start of the year to north of $480 by the end of January.
GameStop touted that global e-commerce sales made up 34% of net sales in the fourth quarter compared with 12% in the year-ago quarter. It also noted a 6.5% gain in sales at stores open at least a year, a key retail industry metric.
But there was less encouraging news as well: GameStop announced it would suspend earnings guidance as it focuses on its bid to bring more of its business online. And, in a break with the Wall Street norm, CEO George Sherman didn’t take any questions from analysts during a post-earnings release call. Sherman did not address the recent volatility in the company’s shares in his remarks.
GameStop shares were little changed in after-hours trading. They fell 6.6% to $181.75 in the regular trading session and are still up about 864% this year.
The Grapevine, Texas, company reported net income of $80.5 million, or $1.19 per share, for the three months ended Jan. 30. That compares with net income of $21 million, or 32 cents per share, a year earlier.
The latest results include a nearly $70 million tax benefit. Adjusted for that and other one-time items, the company’s earnings amounted to $1.34 per share, versus $1.27 a year earlier.
Revenue fell to $2.12 billion, from $2.19 billion. Analysts were expecting adjusted earnings of $1.35 per share on $2.21 billion in revenue, according to FactSet. For the full fiscal year, revenue dropped to $5.09 billion from $6.47 billion in the prior year.
GameStop has been struggling with declining sales amid the growing popularity of mobile gaming and a shift to downloading video games for PCs and console systems like the Playstation and XBox. All that was happening before the pandemic struck a year ago, accelerating consumers’ reliance on online commerce and forcing retailers like GameStop to temporarily close stores.
To adapt, the company has been permanently closing stores and working to grow its e-commerce business.
Earlier this month, GameStop appointed a chief technology officer and hired executives to lead its customer care and e-commerce functions. It also named activist investor Ryan Cohen to lead the company’s efforts to drive more of its business online.
Cohen, who co-founded the online pet supply company Chewy, took a huge stake in GameStop before the online frenzy over company shares began in January. He has been seen as an agent of change and someone who knows how to make a traditional business more nimble through technology.
Cohen’s arrival helped spark the frenzy over the stock, with some on Reddit’s WallStreetBets forum citing Cohen’s investment as a sign the company is on the right track.
On Tuesday, GameStop announced it has hired a new chief operating officer, Jenna Owens, who previously worked at Amazon and Google.
GameStop shares vaulted a shocking 1,625% in January as bands of smaller and novice investors communicating on social media hyped up the retailer’s stock in hopes of making big returns at the expense of hedge funds betting the shares would head lower.
The stock took a step back in February, shedding nearly 89%. It’s been mostly headed higher this month, buoyed in part by the company’s recent moves aimed at strengthening its online business.
The company’s hyperactive stock price briefly rattled global markets and drew scrutiny from Washington amid questions about whether the broader market was in a bubble and whether a new generation of traders should be able to take full advantage of the free trades available on their phones.
By ALEX VEIGA.
Japan’s Paidy BNPL credit provider announces partnership with global PayPal
Paidy, a Japanese “Buy Now Pay Later” (BNPL) solutions provider, which serves 700,000 online merchants in Japan, announced Friday the launch of Paidy Link, a new feature that allows users to instantly link digital wallets with their Paidy accounts.
In parallel, under the launch plan, is Paidy’s partnership with PayPal giving Japanese consumers shopping options through PayPal’s 29 million merchants around the world.
Each purchase will be automatically converted into a Japanese yen purchase with Paidy that can be settled each month with Paidy “Atobarai,” the Buy Now Pay Later service, or 3-Pay. This will allow Paidy users to manage their budgets within the Paidy app.
The 3-Pay service gives customers the option to split charges into three equal, interest-free, monthly installments, which the company said has “been very well received.”
Russell Cummer, Paidy founder and Executive Chairman, said, “I am extremely excited to announce the launch of Paidy Link, offering a great new way for consumers to use their Paidy accounts for online shopping internationally,” adding. “PayPal is an amazing partner for us to launch this functionality with and we are sure that our 5 million account holders will be thrilled to take advantage of the combined power of Paidy and PayPal.”
“We look forward to working closely with PayPal to literally bring the world to our Japanese consumers,” the Paidy founder said.
Paidy’s stated mission is to “take the hassle out of your payment and purchase experiences.” It also aims to create an environment where consumers are shopping within their budget limits.
The app allows customers to shop using their mobile phone number and email address, and then pay the accumulated charges the next month.
Peter Kenevan, VP, Head of PayPal Japan, commented, “We are excited about our partnership with Paidy. This partnership allows Paidy users to have access to PayPal’s 29 million merchants — in fashion, gaming, cosmetics and more — from Japan and around the world.”
By linking their Paidy accounts to PayPal, consumers can enjoy much greater freedom and more choices from the comfort of their home,” He added.
Paidy is an innovator with its use of BNPL, offering monthly-consolidated credit to consumers by enhancing shopping flexibility through split payment and purchase experiences.
Paidy uses proprietary models and machine learning to underwrite transactions quickly and guarantee payments to merchants.
BNPL solutions are branded as having the potential to increase revenue for merchants by reducing the number of incomplete transactions, increasing conversion rates, boosting average order values, and facilitating repeat purchases from consumers.
Mastercard, Geidea team up to bring contactless payments to Saudi Arabia
Global financial services company Mastercard, and Geidea, the largest fintech company in Saudi Arabia by market share, announced earlier this week a strategic partnership agreement to accept Mastercard payments using a Tap-on-Phone solution in Saudi Arabia.
Geidea is the first fintech company to roll out contactless payments acceptance technology across the Kingdom, which will enable businesses to use smartphones as payment acceptance devices.
Tap-on-Phone is an innovative, intuitive, and cost-effective app-based solution that allows small businesses to quickly embrace electronic acceptance through their smart mobile or tablet device.
With smart phone penetration of more than 70 percent in the Kingdom, Tap-on-Phone has the potential to reach over 300,000 small and medium enterprises (SMEs) and merchants in the first year alone.
“The COVID-19 pandemic has forced a shift in consumer behavior towards digital and contactless payments channels, making it imperative for businesses to adapt and shift to a more online based model. We are therefore proud to partner with Mastercard and provide businesses with a relevant solution that offers the ability to accept safe, secure and seamless contactless payments through Tap-on-Phone technology,” said Abdullah Al-Othman, the Founder and Chairman of Geidea.
Presently, the Geidea network provides payment and e-commerce solutions to more than 100,000 merchants – covering 600,000 payment terminals and ATMs within the Kingdom.
As one of the many use cases, Tap-on-Phone enables more SMEs to accept secure card payments on delivery, in lieu of cash-on-delivery (COD) which is often the only on-delivery payment option.
According to Bain.com, around 62 percent of MENA online shoppers choose COD as payment method when buying online, compared with less than five percent in the UK and France. Cash conversion is key to developing a new payment landscape and improve consumer experience.
“Through our partnership with Geidea, we can help small businesses expand their ability to accept digital payments and grow their earning potential. The solution will also help Saudi Arabia to transition safely into a secure digital payment ecosystem, without the risks associated with a large cash pool,” said J.K. Khalil, Country Manager, Saudi Arabia, Bahrain & Levant, Mastercard.
Tap-on-Phone makes it easier for SMEs to use their compatible smartphones to accept quick, easy, and secure, payments from their customers for goods or services. It saves businesses money and time, because all they need to receive electronic payments is an NFC-enabled Android device on version 7.0 or newer.
Geidea also recently became the only non-bank institution in Saudi Arabia to be granted an acquiring license from Saudi Central Bank (SAMA). The license enables the fintech company to process secure, fast, and seamless end-to-end payment solutions directly to merchants.
Facial recognition for payments to reach 1.4 billion users by 2025
Contactless payments have been one of FinTech’s most prized innovation, silently growing in popularity within all types of commerce and shopping, with the pandemic skyrocketing its adoption across the board.
As such, facial recognition for payments is on track to become the new norm of payment methods as the number of users of software-based facial recognition to secure payments will exceed 1.4 billion globally by 2025, from just 671 million in 2020, a new study by Juniper Research found.
This rapid growth of 120 percent demonstrates how widespread facial recognition has become; fueled by its low barriers to entry, a front-facing camera and appropriate software.
“We identified the implementation of FaceID by Apple as accelerating the growth of the wider facial recognition market, despite the challenges to facial recognition during the pandemic with face mask use,” the research highlighted.
Seeing that technological innovation tend to trickle down toward other uses, all indications point toward the inevitable growth toward facial recognition for payments.
However, researchers at Juniper recommend that facial recognition vendors implement robust and rapidly evolving AI‑based verification checks to ensure the validity of user identity, or risk losing user trust in the authentication method as spoofing attempts increase.
Fingerprint sensors dominant, facial recognition growing
The new research – called ‘Mobile Payment Authentication: Biometrics, Regulation & Market Forecasts 2021-2025’ – found that fingerprint sensors will feature on 93 percent of biometrically equipped smartphones in 2025.
This compares favorably to hardware-based facial recognition, with just 17 percent of biometrically equipped smartphones featuring these capabilities in 2025.
“Hardware-based facial recognition is growing, but the ability to carry out facial recognition via software is limiting its adoption rate. As the need for a secure mobile authentication environment grows, smartphone vendors will need to increasingly turn to more robust hardware-based systems to keep pace with fraudsters’ evolving tactics,” research co-author Susan Morrow explained.
Voice recognition for payments growing, but limited in scope
In parallel, the report also found that the use of voice recognition for payments is increasing, from 111 million users in 2020, to over 704 million in 2025. The research identified that, at present, voice recognition is mostly used in banking, and will struggle to grow beyond this, due to concerns around robustness.
“Juniper Research recommends that vendors adopt a multi-method biometric strategy, which encompasses facial recognition, fingerprints, voice and behavioral indicators to ensure a secure payment environment,” the report authors noted.
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