Over the course of the recent weeks, GameStop Corp’s (NYSE:GME) stock has declined steadily and brought the problems bugging the company at this point into sharp focus. Due to the increasing preference for downloaded video games rather than physical games, the company’s earnings have come under intense pressure, and since 2012, the GameStop stock has lost considerable value.
This particular switch has proven to be a body blow for GameStop, and despite the winds of change in the gaming sector, the company did not try to adapt to the new realities. Hence, investors eventually turned against the stock.
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The company’s problems became apparent when it released its latest quarterly earnings report. In that quarter, the company’s total global sales fell by as much as 25.7% year on year, while comparable-store sales plunged by as much as 23.2%. The losses for the quarter stood at $40.2 million, which worked out to losses of $0.49 per share. Due to the company’s continued poor performances, its market cap is now pegged at only around $270 million.
However, that is not all. GameStop also has long term debt to the tune of $419.4 million in its books, and that could be another major concern for investors.
That being said, it should be noted that the company still has $290.3 million in cash, and that offsets the debts somewhat. The cash position gives the company some much-needed cushion amid dwindling sales and a declining stock price. If there is some decline in the growth of downloaded games, then it could prove to be beneficial for the company.
Analysts expect the company to grow at a rate of 4.11% up until 2023, and in addition to that, the need to access broadband in rural areas in America could also prove to be a growth trigger for the stock. Considering the company’s cash position and the possibility of a rebound, GameStop could prove to be an interesting stock to track for investors. Sign-up below for continuing coverage on shares of $GME stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!