Originally posted by: jonebone
GME rents their space and most leases left are in the 18 month time frame so it's easy for them to exit low performing locations. MS and Sony both confirmed physical media next gen and backwards compatibility, so GME will thrive when the HW sales take off. Management also doubled down and did a stock buyback ($10M? $20M? can't recall) at $5.20 about a month ago. Everytime I read an article comparing it to Blockbuster I just shake my head as the analyst didn't really do much "research" when publishing their article.
I guess how I'm seeing it is that while they are definitely going to need to shed some retail space, I'm skeptical that they are going to manage to consolidate the sales from the lower performing stores into the stores they keep. i.e. they'd be cutting losses on rent and store operation, but total revenue would probably be dropping since there is a limit on how far out their way a person is going for a place like Gamestop before they just buy it online cheaper.
I'd never suggest that the place was full-blown-streaming-era Blockbuster today.
But there are certainly a lot of similarities between a glorified video-game pawn shop and early-Netflix-era Blockbuster.
Blockbuster had tons of time and money that could have been used to adapt, and they failed to do so.
Gamestop still has at least one console generation left before they are just selling previous-generation-only. So they have some time to work it out.
That said... will be interesting to see where their stock goes in the meantime.
But I wouldn't exactly call sub-$5 "irrational" market behavior when the stock was very recently slashed their sizable dividend to zero.
(though at the same time, given your previously stated average price, I can't really fault you for hanging in there, since the difference between your current loss and risking riding it to bankruptcy is pretty negligible in the scheme of things to where it could be worth the gamble)