GameStop Share Price Tanks on Weak 4th Quarter

GameStop Share Price Tanks on Weak 4th Quarter

GameStop

GameStop's share price has taken another dramatic plunge as fourth-quarter earnings come in well below analysts' expectation.

GameStop released its 2013 holiday sales results and on the surface, the news was good. Total sales for the period hit $3.15 billion globally, a 9.3 percent increase over 2012, while total comparable store sales were up 10.2 percent. New hardware sales, driven by the release of the Xbox One and PlayStation 4, were up a remarkable 99.8 percent. "We are in an excellent position to drive the global adoption of the next generation of new videogame products in 2014," GameStop CEO Paul Raines said.

New software sales came in lower than expected, however, and based on that and other factors, CFO Rob Lloyd said the company now expects fourth-quarter earnings per share between $1.85 and $1.95, while full-year earnings per share will range between $2.96 and $3.06. Both are well under the expectations of analysts, who had called for fourth-quarter EPS of $2.14 and $3.25 for the full year, and that shortfall caused GameStop stock to drop by nearly 20 percent. The share price closed yesterday at over $45 but opened this morning at $38.40 and quickly tumbled further, bottoming out at $36.20 before beginning to inch its way back up to the $37 mark.

GameStop's share price was already down thanks to last week's announcement of PlayStation Now, which drove its value down by more than eight percent. The price had bounced back slightly from that point before this latest tumble, but was still well below its 2013 high of $57.74.

Sources: Yahoo Finance, GameStop

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New software sales were down amidst a release of a new generation with precious few new games and no backwards compatibility? Colour me shocked.

Maybe this was the plan after all. Forget used sales: kill Gamestop by not releasing games!

Analysts, the scourge of the investment world. I'm not defending Gamestop, but their report is only going to drive the price lower. It's manipulative and it should be illegal for them to give "predictions" of things which are not all that predictable. Extremely good analysts have a proven track record of luck and nothing else. Both good and bad predictions, as a whole, perform worse than random chance in most cases.

 

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