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.

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  • 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.


  • 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.

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