Business

Gamestop share price picks after it plugs in to find the buyer




Dealers use store technology to compete

Gamestop, the country's largest independent video game seller, stops finding a buyer. The company's stock price tumbled 25 percent early in the morning trading, with investors apparently questioning the brick-and-mortar dealer outlook as more consumers download games online.

Gamestop began considering strategic options, including a possible deal to sell the company, in June last year. But it stopped pursuing a sale "because of the lack of available funding on terms that would be commercially acceptable to a potential buyer," the company announced Tuesday.

Shane Kim's interim gamestop quoted the company's problems in a earnings call in November and noted that "we continue to face challenges in our traditional physical video game retail business model."

How brick-and-mortar dealers compete with online giants

Gamestop will also continue to look for a permanent CEO, after former CEO Michael Mauler resigned in May after just three months in office.

With no buyer in sight, the company must now get its financial house in order, says analyst Michael Pachter in a research note. "We expect GameStop to aggressively cut costs in 2019 and beyond, to pay off its debt balance to zero and to increase its buy-back program."

As digital downloads cut into physical sales of video games, the retailer must improve its collectibles sales in the big picture and make their stores more engaging for the experience-hungry consumers, says Telsey Advisory Group analyst Joseph Feldman.

"You want to give people a reason to return to the store, whether there are play areas or places to relax with friends in there," said Feldman.

The dealer has more than 5,800 stores globally. , $ 1 billion in third quarter 2018 revenue, and $ 0.67 earnings per share, up nearly 5 percent and 25 percent, respectively, from the previous year.



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