GameStop Stock: It Gets Worse

GameStop (NYSE: GME  ) is winning the game for investors these days. Shares of the leading stand-alone video game retailer hit a four-year high on Tuesday.

In this video, Rick argues that it will be all downhill from here for GameStop stock.

Bulls argue that the new console cycle will help lift GameStop's sluggish comps, but that certainly wasn't the case with the Wii U in November, and it's hard to get too excited about the next wave of shiny new systems out of Sony (NYSE: SNE  ) and Microsoft (NASDAQ: MSFT  ) . 

Sony has already announced that the PS4 will be running on a new chip architecture that prohibits compatibility with older games, and that's going to sting GameStop's resale business. Microsoft has yet to reveal specs for the heir apparent to its Xbox 360, but it's a safe bet that it will emphasize digital downloads, potentially bypassing physical retailing.

GameStop's fat dividend and attractive unit economics may seem appealing now, but it won't seem that way as store traffic starts to thin out. GameStop stock is probably going lower.

Play a bigger game
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

 


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

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.

  • Report this Comment On April 19, 2013, at 3:58 PM, Burstedbladder wrote:

    If Gamestop were smart, they would start loadig nup on aall the previous systems of the Sony and MS Xbox, and bring back all the Game Cube and Nintendo64 systems and their games as well.

    no need to sink a company due to the new PS4 and Xbox coming out. I know people that are buying the current PS3 and Xbox systems and will not be buying the newer ones.

    Making a system and preventing the buyer from playing their older games on them is pure bs and wrong.

    I hope Sony and Microsuck both tank over this.

    jussayin-

  • Report this Comment On April 20, 2013, at 11:31 AM, Varchild2008 wrote:

    Any video game console that is based on digital downloading is a complete nonstarter for me.

    As is any console system that isn't backwards compatible in any way.

Add your comment.

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: 2372196, ~/Articles/ArticleHandler.aspx, 11/28/2014 7:19:50 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...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement