GameStop stock price rallied 44% in a single day after the announcement that GameStop has struck a multiyear deal with Microsoft to standardize its operations on cloud solutions.
The gaming company says the deal will help in improving the technology infrastructure along with expanding its digital and physical video game offerings.
“This is an exciting day at GameStop as we announce the advancement of an important partnership that capitalizes on the power of our operating platform and significant market share in gaming to accelerate our digital transformation; drive incremental revenue streams, and over time, further monetize the digital world of gaming, George Sherman,” GameStop’s Chief Executive Officer said.
GameStop stock price has hit the highest level in the past twenty-two months after the latest rally.
Its shares are up almost 53% since the beginning of this year, accelerating the twelve months gains to 70%. GameStop stock price currently trades around $14.
Analyst’s price target upgrades and strong monthly sales reports added share price gains in the last two months. In the month of August, overall sales grew 37% from the past year period to $3.33 billion, accelerating 2020 sales to $29.379 billion and that is up 23% year over year.
Gains were broad as hardware, accessories, and content reported high double-digit sales growth in August.
Gaming sales soared 32% in July and almost 26% in the previous month following a 52% growth in May and a 73% increase in April.
Analysts at Jefferies and Telsey Advisory Group has provided buy ratings to GameStop stock.
On the negative side, GameStop has posted poor second-quarter results due to pandemic related lockdowns. Its sales fell 26% year over year in the latest quarter, missing revenue estimates by $78 million. It has generated an adjusted EBITDA loss of $62.4 million compared to the consensus for $55 million loss.