Back to Square One for GameStop Sale

GameStop is no longer looking for a buyer. The company announced yesterday that they have stopped the process of seeking sale of the company. Financing companies and banks were not providing terms that both parties (GameStop and the buyer) found agreeable. After 7 months of searching, GameStop has called it off.

With an end to the hunt, GameStop's stock market shares fell by 27%, and it will have a difficult time catching back up. A number of investment experts have remarked that GameStop selling now would be an optimal time for them. It would give a chance for the company to re-focus on it's core efforts of video game sales, install new leadership, and potentially turn the company around. GameStop still doesn't have a CEO in place, with an acting interim president since May of last year.

There are some positives from GameStop that may help them in the long-run. The company did manage to sell off their Spring Wireless division for $700 million. That is a hefty cash infusion that can be used to pay off some of their debts (one of their loans is due this year). The rest of the money can be used to continue handling debts, or to help re-structure the company's business model. 1990's GameStop business strategy doesn't work in 2019. People are going more mobile, more digital, and less "used." Publishers are putting older games online once again in droves at a price that's modest to what GameStop sells used games for; which is the company's bread and butter. GameStop reported a third quarter loss of almost $500 million due to declining game sales, while console and collectables were steady.

What will be the future of GameStop? It's up in the air. I wouldn't be surprised if it folded in a few years, found a buyer willing to take on the debt, or they could transform into a functioning business once more. They need a leader that is willing to make changes and drive the business into the 21st century. We'll have to wait and see what happens next.

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