GameStop Corp. (GME)

Fully merged with Electronics Boutique, GameStop is now the #1 specialty videogames retailer. The next console cycle is already under way with the Xbox 360. The cycle ramps up explosively this year when the PlayStation3 hits in November. GameStop is positioned to do extremely brisk holiday business, and then will be a longer-term beneficiary as many of us purchase in the years ahead the compelling new games for our consoles. I don't think this is one of the great COMPANIES -- e.g. their online site has suddenly made it hard to cancel pre-orders, which I find really unimpressive and inconvenient -- you have to E-MAIL them instead of just clicking in to the store and canceling. That said, where's the direct competition -- the clear Pepsi to GME's Coke? I'm often looking for, and buying into, such situations. Longer term, the only potential threat I can foresee is direct sales via the consoles themselves, cutting out GME. But I think this stock is a long-term winner, passively held.

Video games are bigger than Hollywood. Great games coming out this year, and many people have gotten involved with gaming for the first time through the Wii platform.

Gamestop is always packed with lines to the cash register.

Sure, WalMart is another place to buy games, but Gamestop is the place to go.

I have more than doubled my money in this stock already. If you like the video gaming theme, this is a must own stock. This specialty retailer has nearly 4500 stores, under GameStop and EB Games and a 2 million strong magazine, GameInformer, which is fat with advertising. If you think business is going away because of video game downloading, then I urge you to visit a GameStop on a saturday and see how crowded these places get. People still like to trade in old games and buy new ones, browse, etc.

GameStop retails video game products and PC entertainment software. The company sells new and used software, hardware, and game accessories for the PC and video game systems from Sony, Nintendo, and Microsoft. It also provides computer and video game magazines and strategy guides, action figures, and other related merchandise. GameStop has over 4600 stores worldwide with presence in US, Canada, Europe, Australia and New Zealand.

Worldwide, the videogame industry is set to grow at a CAGR of 11.4% to $46 billion in 2010. Launching of hardware consoles like Xbox, DS and Play station further boosts the prospects of this industry. Also, traditional toys losing market against the interactive video games, augurs well for GameStop, which has about 21% market share in the US videogame market. Today, GameStop has a wide array of popular games in its portfolio with WWE, Smack Down 2007, and Splinter Cell, to name a few. The third quarter performance of the company was excellent with over 89% rise in the topline. It was powered by strong surge in hardware and software sales that benefited from robust consoles and new title releases. To keep the success story going, GameStop has achieved strong software sales in the holiday season.

Looking ahead, management expects used game business to slow down. However it would be offset by their new game business, which will rise with new titles and increased installed base of hardware platforms. Company is also launching a new version of “World of Warcraft” which is world's most popular Massively Multiplayer Online Role Playing Game. Further, company is dynamic on store openings with 500 openings to be planned for fiscal 2007. In the light of healthy industry fortunes and robust company performance, GameStop is well set to play big innings.

Gamers like human interaction and talking to other gamers. Where else can he/she go besides a Gamestop or EB?

Over the past 20-30 years, videogames have become huge. Everyday more and more people play videogames. Gamestop and EB Games stores are the only vdeogame retailer stores around where I live. Videogame sales are through the roof and now with the newest console, the Wii, even more people are gamers. Videogames are appealing to larger crowds and sales will keep increasing because videogames are fun and addictive (trust me! I know from experience. I can't put my Wii down!!!!) ; )

In my belief, gamestop is worth much more than it is now, which is trading around 37.50 as of today. A catalyst for gamestop is, obviously, the new hardwares of Nintendo Wii and Playstation 3 on November. Another is the release of Halo 3 on January 1 and also, if the rumors is true, Microsoft cutting $100 off its X-Box 360s. Great Stock, Great Company, and will have a Great, and might I add Foolish, Run in the upcoming months.

Market leader with limited competition. My daughter (and many other sons and daughters, I hope) will keep them in the green!

They try to force you into preorders, gouge you on used games, and talk you into guides when it takes 12 seconds to find a walkthrough online. Not good business for the long term when it's just as easy to get most games at Best Buy, Target, Wal-Mart, etc...

For the very short term I don't see many issues with earnings or profitability with GameStop.
However, the bread and butter of the store level profitability lives and dies with their ability to maintain very high margins on their pre-owned games and consoles (Games are bought at a range between 3-22 dollars and sold for 14.99 - 64.99). Many of the major electronic stores as well as the some of the conventional mall based CD/DVD stores are starting to target the pre-owned game markets by offering either better trade in values or low cost pre-owned games which could in the longer term severely impact in store sales.

The products they sell are going to go away. Check out what EA Sports' President has to say about it:

http://uk.games.ign.com/articles/103/1036254p1.html

Most of you would choose probable death, so you start moving towards a hybrid model of digital distribution."

When asked if he was saying the consoles could become sinking ships, Moore reiterated his statement.

"I'd say the core business model of video games is a burning platform. Absolutely. We all recognize that, and we'll recognize it 10 years from now when we tell our grand kids," he said. "We'll tell them we used to drive to the store to get shiny discs that have bits and bites on them and we'd place them in this thing called a 'disc tray,' and it'd whirl around…and they'll go 'What?'"

"So, the concept of physical packaged discs and the core business model that is video games as it currently stands is a burning platform."

New consoles out soon and nobody benefits directly like GME. Also, three months after new consoles come out, used games start being traded in and GME really benefits because of higher used game margins.

GameStop offers one key element that Amazon and other online retailers can't match. When my boys were just 10-12 years old, they could do business with the local GameStop store without much money, and certainly no credit cards, mostly by trading in games for credit toward new ones.

Unless someone else with similar brick & mortar presence in Smalltown & Bigcity, USA, such as Walmart, gets into the used game trade, I think GameStop is well positioned to outperform, at least with the current players on the horizon.

This stock will see a surge during this months holiday seasons but its going to drop significantly in the next coming months maybe years. True their earnings are decent, its the fact that the gaming industry is turning away from allowing reselling of games, which makes up a lot of Gamestop's services. With games getting more and more connected through online play, the game developers would rather sell through that media than make no money when gamestop resells their game. Gears of War 2 for example has maps for download with a unique code with a new copy, if you buy the game second hand you will not be able to achieve these maps, all the guitar hero/rock band sell their songs online so the companies make some money. A lot of video game companies do not like the resale of their games and are looking for ways to fight reselling. Unless Gamestop changes or adapts to this changing connectivity in the gaming community they will basically have their whole reselling model be obsolete.

The PE is too high to sustain after Christmas and the market is already trending this stock downward. I'm sorry I missed the last 5% that was deflated from it this last month but I am certain there is more correction that is necessary (notice I didn't say 'to come'. Gaming is an emotional purchase and issues of new consoles and the like may support these guys for a good while, it just seems from the math, that it shouldn't).SHORT into the spring or down to $40.

As the No. 1 "game launderer" in the world, you can't help but think a semi-struggling economy works to GameStop's advantage. People aren't yet willing to give up their games, but they might consider a legitimately-purchased "used" (i.e. lifted from Wal-mart) game to save a quarter-tank of gas. Brown-market (?) games in the suburbs, and with a credit card, no less. We all win -- except Wal-mart, and they have plenty. Ain't capitalism grand!

Gamestop distributes video games. It started out only a year ago at about $17 and is now up significantly. I think it will outperform around Christmas time when we Americans tend to load up on computer goodies for the kids.

Up over 150% since my initial purchase in the beginning of '05, I love Gamestop. And with a PEG of 1.04, an entity value/revenue of 1.11 and a surging game industry, GME still looks solid.

About to get an onslaught of business with the release of the Wii next month, and the Playstation 3 (whenever Sony gets it together). With in store demos and the promise that the Wii can play any older game, sales of used games should be brisk even if Wii units go on backorder. Lots of proximity shopping will take place as well when people get psyched about the new gaming systems.

I'd look for a big post x-mas bump and then some fairly solid quarters following that. Only wish I had paid attention and hopped on board about a month ago.