GameStop (NYSE: GME ) is winning the game for investors these days. Shares of the leading stand-alone video game retailer hit a four-year high on Tuesday.
In this video, Rick argues that it will be all downhill from here for GameStop stock.
Bulls argue that the new console cycle will help lift GameStop's sluggish comps, but that certainly wasn't the case with the Wii U in November, and it's hard to get too excited about the next wave of shiny new systems out of Sony (NYSE: SNE ) and Microsoft (NASDAQ: MSFT ) .
Sony has already announced that the PS4 will be running on a new chip architecture that prohibits compatibility with older games, and that's going to sting GameStop's resale business. Microsoft has yet to reveal specs for the heir apparent to its Xbox 360, but it's a safe bet that it will emphasize digital downloads, potentially bypassing physical retailing.
GameStop's fat dividend and attractive unit economics may seem appealing now, but it won't seem that way as store traffic starts to thin out. GameStop stock is probably going lower.
Play a bigger game
It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.
No comments:
Post a Comment