GameStop made the official announcement that it will not try selling itself to another company. The video game retailer had no further details on its future, but investors certainly noticed and GameStop’s stock plummeted not long after making the big reveal.
“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 acquirer,” the company said in a blog post. Unfortunately for GameStop, the announcement caused investment stock in the company to rapidly fall, with the value dropping by more than 25% to $11.21 at the time of this writing.
The company began looking for a potential buyer in June of 2018. GameStop entered talks with a private equity firm and even hired a financial advisor. Although, the company never said that a buyout would be the ultimate outcome. They previously stated that all options were being considered when it came to saving the company from financial hardship.
In a recent report by Variety, Wedbush Securities analyst Michael Pachter said that GameStop’s decision could be because they were unable to find an investor due to a decline in physical game sales and new competition. “A new console without a disc drive–unlikely, but possible–could kill [GameStop’s] business,” Pachter explained. “And all this talk of Amazon, Apple, and Google [streaming games] causes some to question whether there will be consoles at all.”
The company that once built an empire on used game sales and physical releases of new titles is feeling the shift toward a digital \-based model for video game sales. E-stores are how a majority of gamers make their purchases and GameStop has been unable to keep up. We’ll be sure to keep an eye on any updates regarding this story so be sure to keep checking back with us here at GigamaxGames.com.
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