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Video game retailer GameStop reported first quarter earnings with a better EPS but miissed on sales down 13% year-over-year to $1.5 billion seeing $GME plunge 40%. While escapism is in vogue, Fortnite and online has changed the landscape.

devil may cry 5 

GameStop Going the way of another Tryhard Gamers say

GameStop Corp. NYSE: GME

Reported Earnings After Close Tuesday

$0.07 Beat Exp ($0.03) EPS BUT $1.50B Missed $1.64 Billion forecast in revenue

Earnings

GameStop Corp. reported first quarter adjusted earnings of 7 cents per share but sales declined 13% year-over-year to $1.5 billion. Analysts had expected the company to post a loss of 3 cents per share on revenue of $1.64 billion. GAAP net income was $6.8 million or $0.07 per diluted share compared to net income of $28.2 million or $0.28 per diluted share in the prior-year quarter, which included the Spring Mobile business. Comparable store sales declined 10.3% for the quarter ended May 4, 2019.

Gaming continues to flourish the method of gaming has changed with online and the explosion of Forthite. Gaming software giant Take-Two Interactive Software (TTWO) late Monday reported earnings for the fiscal fourth quarter and guided higher of an adjusted 78 cents last month

Gamestop has been hit on multiple fronts, the collapse of brick and mortar stores and the success of fortnite has elimated alternative game sales whilst at the same time franchise titles are being played more online through the publisher like Take Two. Gamestop is also at the end of console upgrades which creates a lull in sales.

Gamestop is a lesson for the waste of buying your own stock back for when it all goes wrong. Just think about all that stock bought back over the years. The other is when you are paying a dividend ahead of putting off change it may be too late, rip the band-aid off and stop paying dividends, Could you imagine if GME had of embraced online in the position they were?

GameStop Corp. NYSE: GME

Market Reaction > After hours $4.83 USD −$2.99 (-38.24%))

GameStop GME Q1 2019 earnings

Outlook

“Since joining GameStop in April, I have been undertaking a thorough review of the business and working closely with the team to improve our operational and financial performance, address the challenges that have impacted our results, and execute both deliberately and with urgency. We believe we will transform the business and shape the strategy for the GameStop of the future,” said the new CEO George Sherman.

GameStop’s board of directors decided to eliminate the quarterly dividend, effective immediately, to strengthen the company’s balance sheet and provide increased financial flexibility and optionality. By not paying the dividend, the company expects to preserve about $157 million in cash annually, based on the dividend amount paid in 2018.

GameStop GME Q1 2019 earnings reaction

GameStop shares, plunged to a 52-week low ($7.32) last Friday, and had dropped 38% since the beginning of this year and 45% in the past 52 weeks. They have fallen another 40% today

The gaming industry has seen competition, demographics and trends change dratically. There has been a big jump in software development and royalty (SDR) expenses, marketing expenses rose 63.5% and of course G&A expenses

It is not just about Fortnite at TTWP in the first nine months of this year, Grand Theft Auto (25.1%) and Red Dead Redemption (35%) together contributed 60% of revenues to the company. 

Red Dead Redemption was an instant hit which should come as a big relief for the TTWO to reduce its dependency on the Grand Theft Auto franchise. Within three months after launch, the company sold 23 million units, surpassing analyst lifetime estimates for the game.

NBA 2K franchise has also been getting good traction with gamers. Jointly owned with NBA, the game was launched in May 2018 on the lines of a sports league format. Take-Two has announced that next season would see 21 teams participating which would augur well to bump up its revenues. This also would help the firm to grow its esports business in the near future.

A gaming stock's guidance is affected by the games they produce and when and with Take Two the money tree, “Grand Theft Auto Online”. 

Outlook

The next big game launch for Take Two will be Borderlands 3. The latest installment in the critically acclaimed "shooter-looter" game series is set to launch on Sept. 13. It will be available for Windows PCs and the PlayStation 4 and Xbox One consoles.

Kerbal Space Program: Breaking Ground is due for launch this month through its Private Division label. In addition, t in the pipeline for release in 2019: Ancestors: The Humankind Odyssey and The Outer Worlds.

What is impressive with $TTWO is both Grand Theft Auto V and Grand Theft Auto Online remain among the company biggest contributors nearly four years after they were first launched for Playstation 3 and Xbox 360. NBA 2K18, WWE 2K18, WWE SuperCard and Mafia III all were top contributors Red Dead Redemption 2 is an exciting addition for fiscal year 2019.

 

Some of the big Games of 2019

Devil May Cry 5

  • Platform PS4, Xbox One, PS4
  • Release March 8, 2019
  • Developer: Capcom
  • Genre: Action
  • Stocks in Play: Sony $SNE, Microsoft $MSFT, Capcom $CCOEY

The Devil May Cry franchise started back in 2001 and rebooted in 2013 boasting over 16 million sales world wide.  What excites this time is players can take control of favorites Dante and Nero while also introducing the mysterious Goth fighter and demon summoner V to shake things up with three little demons based on enemies from the first game to fight. We meet Griffon, an eagle that uses ranged lightning based attacks, Shadow, a panther that forms blades, spikes and portals out of its body, and Nightmare, a large golem which V enters a Devil Trigger-like state, which turns his hair white, to summon, which uses a combination of melee attacks and laser beams. The game is an actual continuation of the critically acclaimed series.

 Far Cry New Dawn

Far Cry New Dawn

  • Platform PS4, Xbox One, PC
  • Release  February 15, 2019
  • Developer: Ubisoft
  • Genre: Adventure
  • Stocks in Play: Sony $SNE. Microsoft $MSFT, Ubisoft $UBI

Far Cry New Dawn will be the twelth installment and sixth main title feature in the series and is the standalone sequel to Far Cry 5. Here we are back at Hope County, Montana seventeen years after a global nuclear catastrophe. Less than a year from when Far Cry 5 came out the new instalment begins after the events of Far Cry 5 taking us the post-apocalyptic era.

Rumors have been all over gaming forums of the content, delving in the crazy world that is global politics in 2018 and beyond. This will aggravate many and be a hoot to play, the more contoversial the more attention. You know the game plan, in a world where the most powerful man on the planet tweets mind wincing comments daily.

 

Yoshi

Yoshi

  • Platform Switch
  • Release  TBD 2019
  • Developer: Bluepoint
  • Genre: Puzzle, Arcade
  • Stocks in Play: Nintendo ADR $NTDOY

There was so much excitement surrounding Nntendo in 2018 after the wild success of Pokemon Go, Switch with the iconic Mario and Link. We were expecting Yoshi to be launched last year now the expectation builds for 2019. The visual content leaks on Yoshi take us to another level on the franchise. Seems like another level of mario level addition on this one. 

Resident Evil 2

Resident Evil 2

  • Platform PS4, XBox One, PS4
  • Release January 25 2019
  • Developer: Capcom
  • Genre: Action
  • Stocks in Play: Sony $SNE $CCOEY

The remake of the classic has gamers old and young buzzing just like the remake of Shadow of the Colossus did last year. The original on PlayStation came out over 20 years ago, I’m excited to see what Capcom has in store for fans with this new take on the classic action-horror title in glorious HD. This version will feature all the visual improvements that modern-gen hardware can provide. While Resident Evil 2 reportedly won’t be featuring the fantastic VR option of 2017’s spine-tingling Resident EVII. release, it will run on that same engine as Leon and Claire do their best to get the hell out of Raccoon City.

Anthem 

Anthem

  • Platform PS4, X Box one, PC
  • Release Feb 22, 2019
  • Developer: Bioware
  • Genre: Action RPG
  • Stocks in Play: Electronic Arts $EA, Sony $SNE, Microsoft $MSFT

The anticipation is mixed on this with the anti EA gamer group loud and proud calling this a poor man's Destiny but for mine I want to see what the developers have with escapism and obtuse elements at its best, can't wait for this one!  Another huge plus, is the game's lead producer confirmed there won't be any season pass or DLC required, a huge plus and perhaps a shout out to Fortnight for that.

Let me know your thoughts on what games you looking forward to in 2019.

Play on....

 

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