Gamestop Corporation (NYSE:GME) has announced the closure of 200 stores worldwide, which did little to help the decline in GME stock.
The world’s largest video game retailer, which operates over 5,700 stores across the globe, has been struggling massively as of late as consumers increasingly flock to digital downloads as opposed to hard copies. While the massive number of stores seems impressive, it has become more of a liability in the digital age. “We are on track to close between 180 and 200 underperforming stores globally by the end of this fiscal year,” GameStop CFO Jim Bell said on Tuesday. GME stock is currently at $4.50, down 2% during Thursday’s trading.
GME Stock in a “Tough Place”
Gamestop posted a wider than expected quarterly loss in its earnings call on Tuesday. Total global sales fell by 14.3% to $1.3 billion USD while net loss was $415.3 million USD. The company reported a 41% decline in hardware sales as gamers eagerly await the next generation of PlayStation and Xbox consoles next year. New CEO George Sherman said the company is in a “tough place” but was bullish about the future for GME stock by saying, “It was important for GameStop to transform and evolve […] We are committed to creating a social and cultural hub of gaming.”
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GME Stock Down 70% This Year
GME stock is down over 70% from a year high of $17.04 and has largely been in decline for much of the last five years, despite the fact that the gaming industry is as strong as it ever was. Interestingly, GME stock recorded its best day in 16 months in August after it was revealed that renowned investor Michael Burry has a 3.3% stake in the gaming retailer, citing the inclusion of disk drives on next-gen consoles as a reason to “extend GameStop’s life significantly.” Burry is best known for being played by Christian Bale in the Oscar-nominated 2015 film The Big Short.
Despite Burry’s bullishness on GME stock, it looks as though the company is going to need a serious turnaround effort from management to rejuvenate investor confidence.
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