Investors are starting to jockey for position on retailers as we head into the holiday shopping season, and the market is apparently placing GameStop (NYSE:GME) on the "naughty" list. Shares of the small-box video game retailer lost more than a fifth of their value last week after an analyst downgraded the stock on sales trend concerns. 

Pacific Crest analyst Evan Wilson lowered his rating on the stock from the upbeat overweight to the neutral sector weight. He's uncomfortable with being bullish on GameStop heading into next week when the chain will report quarterly results on Monday.

Wilson is leaning on data from retail tracker NPD Group, showing that new video game software sales slipped nearly 5% for the entire industry during the fiscal quarter ending in October. That's problematic since many analysts are holding out for flat, if not positive, growth.

Xbox One and PS4 platforms are booming, but we live in a digital age where many of the transactions taking place are bypassing GameStop's strip mall stores entirely. GameStop has invested in digital initiatives. It has also packaged some of the more prolific releases with exclusives that are only available at GameStop. It's the right approach, but the retailer can only hold off the future for so long.

This doesn't mean that next week will be a bloodbath. GameStop has historically performed better than general NPD data. We also can't ignore its higher-margin sales of used games and gear. Folks trading up to a new console can trade in older games and systems for in-store credit. 

There's also an interesting tweak that could make the near-term outlook more promising for GameStop: Microsoft (NASDAQ:MSFT) recently made many Xbox 360 titles compatible with Xbox One. That wasn't the case when Microsoft launched the next-gen console two years ago, and nostalgic gamers may turn to GameStop to buy used versions of some of the games that they can now play on Microsoft's Xbox One. 

The long-term prospects for GameStop are understandably murky. Microsoft and other platform owners want to cut out the middleman, and they can achieve that through digital delivery. The doesn't mean that next Monday will be horrible. If you disagree -- and buy into Wilson's more downbeat perspective -- make sure you position yourself accordingly this week. GameStop reports before the market opens next Monday. 

Last week's 21% drop for a stock that has defied gravity in recent years may seem fair, but the real drivers will ultimately reveal themselves a week from today. 

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.