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Why GameStop Stock Was Down 10% Today

By Rich Duprey – May 4, 2020 at 2:38PM

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The reversal comes after the video game retailer had an especially strong April.

What happened

Shares of GameStop (GME 1.38%) opened sharply lower this morning, and it only got worse from there.

Heading into the last hour of trading Monday, the video game retailer was down more than 10%, giving back a part of the massive run-up it enjoyed in April.

Frustrated video game player holding head

Image source: Getty Images.

So what

Investors may be taking some profits off the table following those gains since GameStop still faces a difficult future. Many questions need to be answered.

For example, while Microsoft (MSFT -1.27%) says its new Xbox game console is still on track for release later this year, an event many GameStop investors have been waiting for to jump-start sales at the retailer, the tech giant expressed doubt video games themselves would be similarly on time.

Because game developers have had to work remotely, as at many other companies during the coronavirus pandemic, their ability to get new titles to market in time for the Xbox or Sony's (SONY -1.37%) new PlayStation console may be compromised. 

A delay in titles may slow sales of consoles for GameStop.

Now what

Sony has said its much anticipated (and delayed) game The Last of Us Part 2 will debut in June, though a leak of cut scenes and more caused an uproar among avid gamers, who were not at all excited about the direction Sony and developer Naughty Dog were taking.

It remains to be seen whether the momentum GameStop had before having to close all of its stores can resume when they reopen.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
$25.04 (1.38%) $0.34
Microsoft Corporation Stock Quote
Microsoft Corporation
$237.92 (-1.27%) $-3.06
Sony Corporation Stock Quote
Sony Corporation
$68.43 (-1.37%) $0.95

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