Why GameStop Stocks Plunged by 39% in January

“GameStop” is a name that is unavoidable by anyone related to Gaming or technology. It was founded in 1984, in a suburb of Dallas(named Grapevine)Texas, USA. GameStop has been one of the pioneers of the gaming world. GameStop has been one of the few companies to start the sale of video games in discs. The company, besides developing and selling video games, has prospered in business ventures like selling electronic appliances, selling products of other companies. GameStop also launches a monthly tech magazine for tech lovers all around the globe.

Like any other company, even GameStop has its fair share of rising and falls. The company was at its peak between the years 2014 to 2016. But soon after GameStop peaked its revenue in 2015, the stocks continuously started dropping. With every passing day, their shares are further falling low. This condition is hitting the company quite hard. There is even news that the company is planning to sell its stocks to a third party, as a last case scenario.

Why GameStop Stocks plunged by 39% in January 

GameStop saw its stock plunge 39.1% last month to just below $4, one of the lowest the company has evidenced. As already mentioned, since 2015(i.e., the previous five years), the company’s stocks have been disastrously sinking. Although GameStop was expecting a fortune for the past few years,  there seems to be no break in bad luck for them. The investors have recently shown resentment in their investment in GameStop stocks. In mid-January, GameStop has announced disastrous holiday sales results, with a 27.5% year-over-year downfall. The outcome was comparatively better last year. 

Standing in the year 2020, with everything being available online, the popularity of old fashioned ‘disc-borne’ games is bound to fall. The boom in esports recently has motivated more people into logging onto their phones and laptops and paying to watch people battle online. This proved to be hazardous for the 1980s-era video game shop’s business. This indirectly is killing GameStop, slowly but gradually.

Conclusion

Unless GameStop takes a sharp change in its business model, their old fashioned Gaming and business strategies will sink even worse. This fact is not unknown to GameStop CEO Goerge Sherman. He even admits that the company might have to suffer even harshly in the coming years until he puts a turnaround plan to effect. Meanwhile,  all GameStop will be doing is to shut down 230 to 250 stores.