Yesterday, GameStop (NYSE:GME) announced that it will permit customers to convert gamestop gift cards. A consumer will have to fill out their gift card info and when verified, an email receipt is going to be brought to them. GameStop is finally realizing that its 4,400 store locations face a serious threat.
Inside a previous article on GameStop, I discussed just how the changing industry landscape was a menace to GameStop’s business design. The marketplace shift to digital downloads plus an influx of purchases with the web will cut GameStop from the equation. As of last quarter, digital sales represented a miniscule 5.7% of gross profit. With such a reliance on physical, GME is placed to for any tough future ahead.
With GME trading its highest level since January, investors should sell their shares and think about the negative long term outlook. The shift to digital and on-line gaming sales is apparent. GME does not have a plus in this domain and can suffer. Management is wanting to spur online sales, though with not a way to supply benefits to sites for example Amazon (NASDAQ:AMZN), it will eventually falter. High costs of the retail locations along with the threat of declining sales will end up being vexing.
Disclosure: The article author has no positions in any stocks mentioned, and no intends to initiate any positions throughout the next 72 hours. This writer wrote this post themselves, and it expresses their own personal opinions. The article author will not be receiving compensation for this (other than from Seeking Alpha). The article author has no business relationship with any business whose stock is mentioned on this page.