The 3 REAL Reasons Gamestop Is Doomed!
1,663The biggest video game distributor in the world will likely soon be out of business. How did this happen? Well here are my three reasons as to what I think REALLY caused Gamestop to fail!
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"EDM Detection Mode" Kevin MacLeod (incompetech.com)
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.
On top of all that, GameStop also eliminated its dividend program. Now that this stock no longer pays out earnings to shareholders, that could encourage more people to sell. In turn, that could create some volatility in the price.
#GameStop #GamingNews #GamingRant