Why GameStop, hhgregg, and RadioShack Tumbled Today

The stock market climbed sharply today, with triple-digit gains for the Dow. But some stocks missed out on the good day, with GameStop falling 8%, hhgregg dropping 11%, and RadioShack giving up 6%. Find out what held these companies' shares back today.

Jan 7, 2014 at 8:31PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stocks got back on a positive footing Tuesday, with positive trade-deficit data making investors more optimistic about U.S. economic growth. Major-market benchmarks finished the day up 0.5% to 1%, but for GameStop (NYSE:GME), hhgregg (NYSE:HGG), and RadioShack (NYSE:RSHCQ), the news wasn't nearly as good.

GameStop declined 8% after Sony (NYSE:SNE) announced that it would offer a streaming video game service for users of its PlayStation 3, 4, and Vita consoles. The news is obviously bad for GameStop, which relies on used game sales as some of its highest-margin business. Nevertheless, digital-download concerns have been a threat for GameStop for a while, and at least while consumers remain excited about new PlayStation and Xbox consoles, GameStop's business isn't likely to take an immediate hit. In the long run, though, GameStop needs to figure out how it will adapt to a digital environment.

The 11% drop in hhgregg shares today added to yesterday's 5% losses, with the electronics retailer having issued a warning about its revenue from the holiday quarter. The company said yesterday that year-over-year sales would drop 11.6%, with an 11.2% plunge in comparable-store sales producing most of the revenue decline. CEO Dennis May pointed to weakness in its consumer electronics, computing, and wireless products during the quarter, and while he emphasized that hhgregg would remain profitable, he said that promotional offerings throughout the industry hurt its results. The big question for investors is whether the rival Best Buy (NYSE:BBY) will see the same pressures, or whether its own competitive activity proved more successful than hhgregg's did.

Elsewhere in the electronics industry, RadioShack fell 6% after The Wall Street Journal reported last night that the stock had seen substantial options activity among investors entering positions that would profit from a continued drop in the company's stock. RadioShack has attracted attention from short-term traders in the past, especially during times of financial turmoil for the company. Unless the holiday quarter offers some positive surprises for the company, RadioShack could continue to see bearish investors making bets on its possible demise.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool owns shares of GameStop. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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