What you need to know
- GameStop recently posted its earnings and they fell short of expectations.
- Used game and hardware sales are down by 20 to 35 percent.
- The company has suspended divided payouts to shareholders.
- Analysts don't expect the company to recover.
It's no secret that the gaming industry is rapidly moving towards complete digital distribution, and it looks like GameStop may be one of this trend's biggest casualties. Yesterday, the struggling company revealed its earnings, and they missed target revenue. According to a report by VentureBeat, "the company's stock price has crumbled to $5, which is the lowest this has been since 2013... GameStop's outlook is dire in part because its core business — selling hardware and used games — is starting to dry up."
The report added that used games sales were down 20 percent year-over-year. Unfortunately, hardware decreased 35 percent year-over-year, too. GameStop eliminated the dividend payouts so shareholders no longer get paid. Due to this, even more individuals may sell their shares. This isn't a good position to be in, and many analysts believe that the company won't recover from this.
GameStop needs to diversify in order to be successful once again, but that may not happen in time. The company has tried its hand at publishing, but those efforts haven't been as fruitful. It's unclear what the future holds, but we wish the institution the best going forward. Only time will tell how this plays out.
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