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GameStop Keeps 'Stumping The Experts' Who Predicted Its Demise

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GameStop Keeps 'Stumping The Experts' Who Predicted Its Demise

GameStop Corp. (NYSE: GME) reported better than expected results this week, rising more than 3 percent in after hours trading Thursday. The stock tumbled Friday and fell more than 7 percent, but analysts have a positive outlook on its future.

"GameStop just keeps stumping the 'experts' who predicted its demise for years as old-style entertainment brands, like Blockbuster and RadioShack, have gone out of business," Patrick Moorhead, president and principal analyst at Moor Insights & Strategy. "Gaming (as a category) is skyrocketing and as the sales show, consumers still like to come to brick-and-mortar to buy many of their games and accessories."

Moorhead said it helps that GameStop has an active rewards program, PowerUp Rewards. He said that GameStop receives special deals from game distributors. The company also benefits from the sale of accessories and used games.

"GameStop still has to find their long-term strategy," Moorhead added.

Related Link: A Best Buy-GameStop Merger 'Doesn't Make Much Sense' But Could Draw Store Traffic

Last Bad Years

Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, told Benzinga that 2011 and 2012 were GameStop's "last two bad years." Since then the retailer has been "charging ahead."

"[There was this belief that] buying games online…or mobile devices were gonna be the ruination of GameStop," said Udall. "That didn't really happen. There's been no end to console gaming."

Udall said that by outlasting all of its competitors, GameStop is "almost like a semiconductor company."

"By the time the industry turns and they're the last man standing, they've got the industry to themselves," Udall added. "GameStop sort of survives in the space, toughed it out. They did make some changes (got rid of some non-performing assets), but they did a good job of staying in places with foot traffic. Every place I've ever lived, the [local] GameStop is busy."

Udall encounters a familiar scenario whenever he walks into a GameStop: lines of customers.

"You go into GameStop at 2:00 p.m. on a Wednesday and you wouldn't think there'd be any people in the store, and there's people in the store!" said Udall. "It's not like they're ever empty."

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

 

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Posted-In: gamestop Patrick Moorhead Sean UdallAnalyst Color Tech Best of Benzinga

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