If you’ve been paying attention to the video game industry lately, you know that GameStop is struggling mightily. The company’s value has been trending downward for years, and profits have underwhelmed. On top of that, they’ve experienced an alarming amount of upper management turnover. All of these problems culminated in a massive stock drop of nearly 40% today. It was a devastating blow that leaves the company’s future in doubt.
GameStop in decline
So what caused this latest plunge? Look no further than their latest quarterly report. Although they managed a net profit for the quarter, revenue declined by over 13%. This was not the result that concerned shareholders were hoping for. Additionally, the struggling retailer announced that it will no longer pay out quarterly dividends to shareholders. It’s not hard to see why investors are in a panic!
This is just the latest blow to a company that has been in trouble for quite some time. GameStop is now on its fifth CEO in the past two years. But the leadership problems go even further. Earlier this year, the Board of Directors attempted to sell the company. They narrowed the choices down to two potential buyers, but then everything fell apart at the last second. On January 29, they officially gave up on selling the company due to the fact that no one was willing to finance it.
In order to erase some of the debt, GameStop sold off their Spring Mobile business for $735 million. Unfortunately, that money wasn’t enough to get the company back on the right track. It’s unclear where they go from here. They seem to be running out of options fast, and the situation is only getting worse. Today’s stock drop (37.85% at press time) puts the company at its lowest point since 2003.