Please Remember That GameStop Is Not a Good Company

1 min read

The obvious problem with GameStop (NYSE: GME) is that it sells physical video game discs out of thousands of stores in a world where games are increasingly going digital. The pandemic has made the situation much worse as would-be video game buyers pivoted hard toward digital downloads and buying games online.

To be fair, GameStop’s online sales have soared as demand for video games shot up during the pandemic. Third-quarter e-commerce sales jumped over 250%. The problem is that sales overall have fallen off a cliff. Total sales dropped over 30% in the third quarter, and comparable store sales were down nearly 25%.

New game consoles are helping – GameStop’s comparable store sales rose about 5% over the nine-week holiday period as shoppers snapped up Sony and Microsoft‘s latest systems. But GameStop makes very little money selling new game consoles. What makes GameStop work is its used games business, and that business has been in decline for a long time.

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