Business in focus: GameStop stock plummets

Business in focus: GameStop stock plummets
Photo: BentleyMall, Wikimedia Commons

GameStop’s shares have fallen a massive 14% on Tuesday, following the retailer’s announcement that it would eliminate its dividend in the face of declining video games sales. While the business recorded a net profit in its latest quarter, the figures still fell far below Wall Street’s expectations.

The company is expecting their 2019 sales to fall about 5-10%, citing below-average video game sales and console sales. This can largely be attributed to the fact that more and more gamers are gravitating towards downloadable video game content and streaming.

Cutting the company’s dividend is forecasted to save approximately $157 million a year, however, the retailer’s issues run deep. What isn’t helping GameSpot’s case is the fact that the current generation of consoles have been on the market for some time now and need a serious upgrade.

From a gamer’s perspective, there’s no real point in buying a current generation console if the next-gen is just around the corner. The business is not expecting the situation to improve much either, having decided to merge ThinkGeek’s online collecting sales with the primary GameStop website.

However, hardware sales should rebound in late 2020, when the new systems are expected to hit shelves. It appears the hardware transitioning period is hitting retailers the hardest, highlighting the importance of console sales to the industry’s big actors.