from the throw-the-dice dept.
A long-standing brick-and-mortar game shop could be the latest victim of the digital age - and it could leave gamers out in the cold. We've seen the pattern before: the demise of a beloved retail chain due to the rise of online shopping, and the decline of in-store retail sales. Now it's happening to the country's biggest retail gaming chain, GameStop.
The full statement from the company is available at GameStop Concludes Process to Pursue Sale of Company.
GameStop shares spiked Wednesday, reaching $348 apiece, only to come crashing down to $172 each early in the afternoon, causing multiple halts in trading of the stock due to volatility. Stocks then moved back up and ended the day at $265[*], a 7% increase for the day.
The past two days were a buying frenzy for the video game retailer's stock since Monday, when it was $136. That surge coincided with a lift to the entire stock market after Saturday's passage of the COVID relief bill in the Senate, as well as with an announcement that the video game retailer is developing a new e-commerce strategy, with Chewy.com founder Ryan Cohen heading that effort.
GameStop shares skyrocketed from less than $20 in early January to more than $480 at the end of January thanks to a massive push by traders on the Reddit forum r/WallStreetBets. The stock price has dropped dramatically since then.
Price quote on Yahoo!
Also at BBC
The Complete Moron's Guide to GameStop's Stock Roller Coaster
Console Options Without Disc Drives Could be GameStop's Final Death Knell
Web Site thinkgeek.com Moving in with Parent Company GameStop
GameStop Heading Towards Possible Doom
GameStop Posts Massive Loss as Pre-Owned Game Sales Plummet
GameStop's Future in Question after Failing to Secure Buyout
GameStop is falling, and many analysts and industry observers are skeptical it can recover. The retailer reported earnings yesterday for Q1 of its fiscal 2020 yesterday where it missed its revenue target. Now, the company's stock price has crumbled to $5, which is the lowest this has been since 2013.
For Q1, GameStop generated $1.55 billion in revenues. That was significantly short of Wall Street's expected $1.64 billion. The company did cut costs to improve its earnings per share, but that's not something it can do every quarter. And GameStop's outlook is dire in part because its core business — selling hardware and used games — is starting to dry up.
Used game revenues dropped 20% year-over-year last quarter. And hardware revenues dropped 35 percent in the same comparison. And while the company has diversified into collectibles with its ThinkGeek brand, that growth wasn't enough to offset other declines.
[...] "Pre-owned revenues declined 20% year-on-year in Q1 2019, driven by continued traffic headwinds from a tougher year-on-year software release slate," Baird analyst Colin Sebastian wrote in a note to investors. "While new hardware sales declined 35% year-on-year, as Switch growth was more than offset by declines in Xbox One and PlayStation 4 sales. Reflecting a console cycle now long in the tooth."
Services like Google Stadia won't help GameStop's situation.
See also: GameStop Slumps 40% to 16-Year Low as Gaming Passes It By
The video game sales slump is killing GameStop
GameStop Stock Is Plummeting. The Bonds Are Doing Fine.
GameStop Has Become the Poster Child for Retail Woes and Tech Disruption