Why GameStop shares are cratering

An underwhelming forecast sends investors running for the exits.

By Motley Fool Investor Beat Jan 14, 2014 5:55PM
Retailer GameStop (GME) reported its holiday sales and provided updated guidance Tuesday morning, and the market did not like what it saw: Shares were taking a double-digit beating.

Sales were up for the holiday period, but GameStop now forecasts fourth-quarter earnings of $1.85-$1.95 per share, significantly below its earlier guidance of $1.97-$2.14 in EPS. Analyst had expected EPS to come in at $2.14, but GameStop's forecast fell well short of that.
Motley Fool analyst Brendan Mathews thinks this is just the beginning of GameStop's pain. With the continuing rise in digital distribution of games, the company's core business of reselling used games is going to soon become obsolete. Image: Arrow Down (© Kyu Oh/Photodisc/Getty Images)

Even though GameStop shares are relatively cheap at just 11 times earnings, the the threat from digital distribution is something investors simply can't ignore.

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Tags: GME
2Comments
Jan 16, 2014 10:28PM
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A future Republican in the making.

http://www.youtube.c​​​om/watch?v=AukE25i​s​p​VY

They are simply adorable and loving little things aren't they?
Jan 15, 2014 6:34PM
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Just another of the once great companies, that thru time, became greedy, arrogant and incompetent.

You started to charge for extras, like pre-order fees, and people told you to shove your GREED up your A$$

You wanted to tell people what to buy because you you said so, and people told you to shove it up your A$$

You stopped catering to the PC gamers like myself, one that is a game collector of PHYSICAL game CD,s and one who would spend thousands of dollars a year in your stores, and told us to order the digital version from your on-line stores, and we told you to shove it up your A$$

New companies will take your place and your greed, arrogance and incompetence will die along with you Game Stop. Once a company becomes too big and starts choosing to ALWAYS listen to the IDIOT CEO's and NEVER listen to the CONSUMERS, that company is GUARANTEED TO FAIL.

I do all my gaming purchases with Amazon and save money in the process. They offer SUPREME costumer service, quality goods, great prices and prompt delivery unlike you GAME STOP.

I told you imbeciles 3 years ago that you were going to go out of business because you had no business sense. I did my part and left, and so have many others. That's what you wanted and that's exactly what you got. Farewell losers!

DIE GAME STOP, DIE!
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