GameStop Suffers Losses Despite Strong Hardware Sales this Holiday


GameStop (GME), after enjoying a recent 96% stock increase, is suffering from a drop in value after lower than expected holiday sales.

The company announced today that while software for the recently launched PS4 and Xbox One provided a boost, the gains were nullified by a 22.5% drop in last generation game sales. New consoles helped pick up the slack, increasing holiday hardware sales by 98%, bringing in $1.05 billion.

Gamestop’s sales rose overall, though the growth forecast has been cut significantly. The expectation for January was sliced to ~$1.95 a share, down from the originally anticipated ~$2.14. The year’s outlook has the company at ~$3.06, a drop from ~$3.25 that was once expected.

Sony and Microsoft enjoyed new console sales of 4.2 million and 3 million, respectively. The expectation was that the consoles would boost GameStop’s profits, but the drop in software sales was too significant.

Sales of games aren’t in a great position to improve, with increasing prevalence of mobile and digitally distributed titles. GameStop is still in a position to survive, but as the market shifts, the company will have to adjust to remain relevant.