GameStop Announces Falling Sales Results And Forecasts, Share Prices Drop

0
25

In recent years, companies in the sale and rental of movies, television shows, and video games based out of physical storefronts have largely been phased out of being to those based on the World Wide Web.

GameStop’s public shares dropped some one-quarter, or 26 percent, in today’s day of trading at Wall Street-based markets. The share price drop, experts say, comes directly from the company’s recent reports that it would be slicing the quarterly dividends of the owners of its preferred shares of stock. Its shares finished the day of trading at just $5.88 per share.

GameStop also announced, among other negative performance indicators, that its revenue had dropped 13.3 percent in the first quarter of its 2019 reporting fiscal year. Major financial industry experts, both individuals and agencies, had widely believed – prior to today’s announcement – that GameStop would announce yearly sales figures to drop roughly 4.9 percent in the coming year. GameStop reported that sales for the coming year will likely fall between five and 10 percent, not citing a particular value for the year-out forecast.

According to Rob Lloyd, the Chief Financial Officer of GameStop Corp, a major reason for the company’s recent negative financial findings is that domestic video game players are waiting to purchase consoles whenever the market’s two main competitors, Sony and Microsoft, release new versions of them. The two most popular members of the current generation of video game consoles, Sony’s PlayStation 4 and Microsoft’s Xbox One, have been on the market since 2013.

As toward the end of all video game console’s lives, the prices of the Xbox One and the PlayStation 4 have both dropped significantly in recent years, not to mention be selling less frequently as in their earlier days.

In total, these two video game consoles’ sales in the United States shot down more than 30 percent in the past year, according to GameStop. A report from GameStop shared in its most recent earnings call that was also put together by the company found that the drop in sales of all video game consoles, taking exception to the recent performance of the Nintendo Switch, throughout the United States was down 35 percent from calculations taken a year before.

Further, says CFO Lloyd, Silicon Valley giants are increasingly moving into the domestic market of video gaming, which is also cutting down on GameStop’s revenues.

In total, GameStop will be giving out roughly $160 million per year less than it did in the past year in terms of shareholder dividends. Before the dividends were stopped, GameStop had just short of $500 million in debt floating over the company.

LEAVE A REPLY

Please enter your comment!
Please enter your name here