Will GameStop Survive?

In the following video, Motley Fool analyst Austin Smith discusses GameStop's (NYSE: GME  ) chances of survival.

One of the problems facing GameStop is that fewer new games are being sold because there aren't a lot of new devices being made. It's been years since we've seen a big upgrade cycle of PlayStations and Xboxes. As a result, there's been a drop in used-game sales as well, and used games account for 70% of GameStop's earnings.

Even the release of a new console and new titles might not help. We've seen poor sales of Nintendo's (NASDAQOTH: NTDOY  ) Wii U, and last quarter, Halo and Call of Duty failed to lift GameStop's numbers. And when the next device upgrade cycle does come around, a lot of manufacturers are expected to introduce downloadable content -- which doesn't help GameStop at all. Electronic Arts (NASDAQ: EA  ) wouldn't want to give a middleman like GameStop a slice of its profits when it could build a relationship with the likes of Microsoft (NASDAQ: MSFT  ) for downloadable games. Microsoft, in turn, would want to have a relationship with a company such as Activision Blizzard (NASDAQ: ATVI  ) , which already has a strong foothold in the online streaming games space, particularly through its World of Warcraft franchise.

GameStop's same-store sales slid 8.3%, and revenue in the most recent quarter slipped 8%. The company would be more of a value trap than a value play right now. 

Just because GameStop is up against the ropes, that doesn't mean investors are out of options. Start 2013 with a bang by uncovering our the stock our chief investment officer has named "The Motley Fool's Top Stock for 2013." Grab a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2205287, ~/Articles/ArticleHandler.aspx, 9/27/2016 1:47:22 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,230.53 135.70 0.75%
S&P 500 2,160.33 14.23 0.66%
NASD 5,301.47 43.98 0.84%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 1:31 PM
GME $27.31 Down -0.33 -1.19%
GameStop CAPS Rating: **
ATVI $44.05 Up +0.07 +0.15%
Activision Blizzar… CAPS Rating: *****
EA $85.05 Up +1.55 +1.86%
Electronic Arts CAPS Rating: ***
MSFT $57.88 Up +0.98 +1.71%
Microsoft CAPS Rating: ****