An equity raise would likely be very expensive and dilutive to shareholders. This would not only hurt GME stock but destroy the idea that the company is in a turnaround. If that happens, GameStop would have to raise more capital, either debt or equity or a mixture of both. This could use up most of GameStop’s $1.45 billion in cash and restricted cash. It also implies that the annual cash burn is over $1.2 billion. This likely is the result of store closings, inventory write-downs or fire sales, and heavier capex spending.

In other words, GameStop’s cash burn is accelerating.

31 quarter, GameStop burnt through $306.2 million in FCF or 84% of the total $364.7 million loss for the last 9 months. This can be seen in the table that the company provided, which is on the right. Source: GameStop - 10-31-21 Quarterly Results - Table highlights by Mark R. To make matters worse, the latest earnings release points out that GameStop lost most of this money in the latest quarter. And on top of that this $365 million FCF loss represents 9.7% (almost 10%) of its $3.76 billion in sales for the last 9 months.

Moreover, it has nothing to show for this wasteful loss. In other words, GameStop has burnt through $364.7 million in the last 9 months. 30, GameStop’s 10-Q shows that Cash Flow from Operations (CFFO) was negative $324 million.īut after deducting $40.7 million more in capex spending, GameStop’s FCF is a loss of $364.7 million. For example, in the nine months ending Sept. The bottom line is that investors want to see GameStop produce positive free cash flow (FCF).

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