General Gaming News

GameStop puts sale rumors to bed due to low interest

gamestop-store-sign

So struggling games retailer GameStop has decided to publicly announce that the directorship is no longer seeking to sell the company. This comes as somewhat surprising due to the lackluster few years that retail enterprise has endured. After years of losses, and this most recent holiday season falling short of revenue projections, many analysts thought the company would be fairly aggressive in seeking a buyer to try and turn things around.

But it turns out that investors and potential buyers are extremely risk-averse, and the prospect of taking on an aging retail company in a market sector increasingly losing ground to digital distribution didn’t excite that much interest. So it would seem that same problems causing sagging sales numbers in various areas for GameStop are also preventing anyone from wanting to shoulder the burden financially.

“GameStop’s Board has now terminated efforts to pursue a sale of the company due to the lack of available financing on terms that would be commercially acceptable to a prospective acquiror,” they stated today.

As expected with announcements like this, it’s a negative market signal, one which sent the stock for GameStop tumbling. Monday at 4 PM the stock traded at 15.49 USD per share. As of writing, the price has fallen to a low of 11.26 USD. That level hasn’t been seen since the announcement of a financial shortfall this past holiday season. For context, the 5-year low for GameStop’s trading is 11.11 USD.

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And if the past announcements of losses are any indication, things will only get worse from here for the ailing giant.

The only way they can seem to turn things around at this point is with a massive restructuring and pivot. Expect the next few months to reveal some major new plans for the company, probably more store closures and staff cuts first and foremost. What follows is a bit harder to predict. The company has seen overall growth in the volume of sales across different sectors, but they need to massively deflate costs to reach a sustainable profit.

Source: GI.biz

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