Please ensure Javascript is enabled for purposes of website accessibility

GameStop Risk Rises as It's Not So Essential After All

By Rich Duprey - Mar 24, 2020 at 12:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The video game retailer reverses its desperate stay-open policy during the pandemic.

GameStop's (GME -3.56%) controversial decision to keep its stores open during the coronavirus pandemic because it was "essential retail" was undoubtedly an effort to survive through the crisis. 

The video game retailer was already just hanging on while awaiting the console upgrade cycle to kick in later this year before the coronavirus pandemic delivered a potential death blow to the company.

Shelter-in-place orders, social distancing, and self-isolation meant even fewer gamers would visit its stores.

A man holds a video game controller holds his head in his hand.

Image source: Getty Images.

Desperate times

The retailer has since rescinded the decision to stay open and is shutting off customer access to stores. Instead, it will process online orders with a curbside pickup program and traditional e-commerce delivery.

CEO George Sherman said in a statement, "As millions of Americans look to GameStop to adjust to their new normal of increased time at home, for work, learning and play, we have implemented practices to help ensure the safety and health of our employees, customers and partners."

The new policy is an attempt to retain customer mind share of its stores at a time when they're virtually required to go online for entertainment. GameStop is undoubtedly worried that its dwindling customer base will not return once they're forced to access entertainment digitally.

The pandemic pushed GameStop to an extreme position, and having had to walk that back, it now needs the crisis to end swiftly and the upgrade cycle to arrive quickly if it is to have a chance of making it through.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
GME
$95.66 (-3.56%) $-3.53

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.