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GameStop Stock Plummets After Rough Holiday Season
GameStop's stock has continued to plummet after an especially arduous holiday season. Once upon a time, GameStop was a mammoth store-front game distributor, but in the face of digital sales and streaming, its business model has become somewhat obsolete. Just recently, industry insiders predicted the imminent death of GameStop, which seems to be coming sooner rather than later.
The stock descent for GameStop began back in 2015, which correlated to a rise in digital sales through online distributors. GameStop's business model was always plagued by the fact that it relied on disc sales, which almost everyone knew would become archaic by the end of the 2010s. Shareholders of GameStop were also disappointed in the company's failure to diversify their products and retain customers with a worthwhile loyalty program. In 2019, GameStop redesigned some stores with the hopes they could revitalize their business by transforming it from a distributor first model, to a "retro gaming bay" that sells snacks, toys and antique games.
GameStop's shift in business strategy has done little to encourage investors, evident by the fact that its stock continues to free-fall. In response to this worsening trend, GameStop has released a financial report to investors, detailing the problems that the business is facing. Compared to the prior year, "total global sales from continuing operations for the holiday period were $1.83 billion, a 27.5% decrease compared to the 2018 nine-week holiday period." This massive drop has done little to sour GameStop CEO George Sherman's optimism though, as he says in the report,
Quote:
“On a positive note, we continued to see growth in the Nintendo Switch platform, which supports our view that our sales will strengthen as new consoles and innovative technology are introduced."
It's worth noting that Sherman did acknowledge the considerable obstacles ahead for the company, but his more-than positive outlook for the future is definitely the most notable takeaway. Sherman anticipates that new console sales will strengthen the company's bottom line, and although that may be the case, it will do little to bring GameStop out of the rut it's already in. More and more consumers are buying game consoles from hardware makers themselves, and if they aren't, they're probably buying from Amazon because of the company's expedited shipping at lower costs than its competitors.
It's unfortunate that GameStop is in the position it is today, but a lack of foresight and an inability to adapt to a changing marketplace are the undeniable reasons they are. Plenty of gamers have nostalgic feelings for GameStop, whether that be for a midnight launch, playing demos at the kiosks inside, or just having a physical place to go to where likeminded fans also are. But now it seems like those experiences will be nothing but memories, unless GameStop is able to revitalize itself in an unprecedented way.
