QUOTE AND NEWS
Market Intelligence Center  Dec 15  Comment 
GameStop Corp. (GME) presents a trading opportunity that offers a 15.59% return in just 214 days. A covered call on GameStop at the $33.00 level expiring on Jul. '15 offers an assigned return rate of 15.59% or 26.58% annualized. This trade...
Benzinga  Dec 15  Comment 
Below are the top electronics stores stocks on the NYSE and the NASDAQ in terms of earnings per share. The trailing-twelve-month earnings per share at GameStop (NYSE: GME) is $3.19. GameStop's PEG ratio is 0.68. The trailing-twelve-month...
Benzinga  Dec 3  Comment 
Following an earnings miss on November 21 and an extension of the Cyber Monday pricing, shares of GameStop Corp. (NYSE: GME) are finally getting a lift Wednesday after falling nearly 20 percent from pre-earnings level of $44. On the heels of the...
Benzinga  Dec 2  Comment 
According to Arvind Bhatia of Sterne Agee, video game sales remained a "bright spot" during Thanksgiving weekend based on the analyst's checks. Bhatia notes that Black Friday traffic at GameStop Corp. (NYSE: GME) may have been lower this year...
Benzinga  Dec 1  Comment 
GameStop Corp. (NYSE: GME) fell sharply following an announcement that it would extend Cyber Monday deals through the entire week, until December 7. According to the company’s press release, “Cyber Monday has quickly become the go-to...
Market Intelligence Center  Dec 1  Comment 
GameStop Corp. (GME) was identified by MarketIntelligenceCenter.com’s patented algorithms today after trading between $37.21 and $37.98 on Friday before closing at $37.81. A diagonal spread using a long position in the Jan. '16 $25.00 call and a...
Benzinga  Nov 29  Comment 
Shares of the multi-channel games retailer GameStop Corp. (NYSE: GME) took a major beating last Friday following the disappointing quarterly results announced by the company. However, with strong sales coming in this holiday season, the company is...
Motley Fool  Nov 25  Comment 
GameStop's shares appear cheap, but the video game retailer faces many threats.




 
TOP CONTRIBUTORS

GameStop (NYSE:GME) is the world's largest retailer of video game hardware and software. The company has saturated U.S. mall locations, and is now expanding into strip centers and international locations to drive store growth. In addition to its size, Game Stop differentiates itself from its competitors by carrying one of the largest assortments of used video games. The used business is important to GameStop, as used games are more profitable, with 46.8% margins vs. 21.3% for new games.[1] The company earned $9 billion in net sales and $376 million in net income in 2009.[2]

Like other video game retailers, the company is also dependent on new console releases to drive software and accessory sales. The three main video game consoles in the market are Sony (SNE)'s Playstation 3, Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii (see Game Consoles Wars: Xbox 360 vs. PS3 vs. Wii), which are nearing the end of their cycles. Retailers, like GameStop, will be much more successful in the middle of cycles and will generally fare worse in between cycles.

Company Overview

Gamestop operates 6,450 stores in the United States, Australia, Canada and Europe, primarily under the names GameStop and EB Games. The company also operates electronic commerce Web sites, including www.gamestop.com, and publishes Game Informer, the industry’s largest multi-platform video game magazine in the United States based on circulation, with approximately 4.0 million subscribers.[3]

Products[1]

  • New Video Game Hardware - 19.3% of net sales, 6.5% of gross profit
  • New Video Game Software - 41.1% of net sales, 21.3% of gross profit
  • Used Video Game Products - 13.2% of net sales, 46.8% of gross profit
  • Other - 13.2% of net sales, 33.8% of gross profit (other products include PC entertainment and other software, accessories, and magazines)


Key Trends and Forces

Increasing Popularity of Video Games

The Entertainment Software Association (“ESA”) estimates that 65% of all American households play video or computer games.[4] With the evolution of technology providing a more realistic playing environment and the creation of family friendly game consoles like the Nintendo Wii, video games are more popular than ever. Additionally, video games can also be more than just about the games -- the Wii Fit Plus combines fitness with gaming and is geared to people of all ages. The increasing popularity of these kinds of games means a higher demand for video games, and a better bottom line for Gamestop.

The Video Game Industry is Very Cyclical

Video game producers and retailers are extremely dependent on new video game hardware to drive business. The main video game consoles are Sony (SNE)'s Playstation 3, Microsoft (MSFT)'s Xbox 360 and Nintendo (NTDOY)'s Wii (see Game Consoles Wars: Xbox 360 vs. PS3 vs. Wii), all of which are nearing the end of their. Hardware sales are usually greatest in the third year of a cycle, and software sales are greatest in the fifth year. Gamestop will look to capitalize on rising software sales rather than hardware sales as these systems mature.

Expanding Target Market

In the late 1970's when video games were first created, the average age of a gamer was ten years old. The average age of a gamer today is 13 years old, according to the Entertainment Software Association. In addition, 25 percent of Americans over the age of 50 play video games on a regular basis. More and more people are spending money on video game hardware and software, which benefits the entire industry. Also, young children are spending more time playing video games, and less time with traditional toys and games. More video game players means more people buying Gamestop's products.[4] dss

Female Video Game Use

Video games have traditionally been a male-dominated market, but the number of female gamers has grown significantly. In 2009 40% of video game users were female. However, most of these female gamers are casual gamers who play card, word, and puzzle games online. These typically older women are not buying video game hardware and software.[4]

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