GameStop (GME) Financial Statement Analysis: Share-Based

School: California State University, Fullerton - Course: ACCT 460 - Subject: Accounting

Ongoing Project Model:Gamestop (GME) Final Project weekly group member assignments : Here is my contribution- name: Uyen Ho MODULE 8 Question 1: Does the company use share-based compensation? What types of plans are used? What was the magnitude of the compensation? What is the magnitude of the outstanding (unvested) option and/or shares? GameStop provides share- based compensation as a benefit for their employees. According to the 10K report 2022, GameStop adopted The Incentive Plan in June 2019 that provides the grant of equity awards to the officers, associates, consultants, advisors, and directors. The plan allows 6,500,000 shares of company Class A Common Stock, plus any shares subject to 2011 Plan, which has been replaced. They also granted restricted stock pursuant to certain "inducement". These inducement awards have generally mirrored the terms of restricted stock awards issued under our stockholder approved equity plans. GameStop annual stock-based compensation for 2022 was $0.031B, a 286.08% increase from 2021. GameStop annual stock-based compensation for 2021 was $0.008B, a 11.24% decline from 2020.

Regarding stock options, there were no options during FY 2021, 2020, and 2019. As of 2022, no outstanding and exercisable options were granted. There were no options exercised during fiscal 2021 and 138,480 options exercised during fiscal 2020. GameStop does not provide a lot of plans for share-based compensation, so it makes the company's compensation magnitude small. The magnitude of outstanding non-vested options/ shares is $3,005,950 during FY 2021 and $195,611 during FY 2022. Compute the market capitalization of the firm and compare to the book value of equity. Find and online source for the average market to book ratio for the industry and see where the firms fit. Follow up on anything unusual. Fiscal YearMarket Capitalization ($Billion)Change 20225.6224.7% 202111.32-50.4% 20201.31762.2% 20190.40227.9% 20181.28-68.9% 20171.81-29.2% 20162.57-12.3% 20152.93-19.98% 20143.66-35.7% 20135.7087.63% The table below shows the comparison between the GameStop market cap and their shareholder equity. The current price to book ratio for GameStop as of March 31, 2023, is 5.30. This ratio indicates that GameStop's stock is overvalued.