Summary
GameStop has struggled along in recent months, which is actually positive news for a company that has shrunk almost 70% in the past 3 years and over 25% YTD.
The company seems to face an inevitable decline as its core hardware, software, and pre-owned segments are being antiquated by the digital and direct-to-consumer gaming transition.
Though the gaming industry is currently booming, it is on the 'parts of the assembly line' away from, and even negatively affecting, GameStop's position.
Accessories and collectibles are actually growing for GameStop, giving it a potential transition cushion that slows its enterprise-wide decline and may give it a long-term niche.
The long-term future for the company remains if it can better modify its business model to capture the growth segments in video gaming, such as e-sports, using its current brand and scale.
Members of our private investing community, Tech Investment Insights, get our best ideas and insights. Get started today >>
GameStop (GME) has been slogging along the past few months as it has continued to face significant investor uncertainty over whether it can slow its declining sales trends, which only continued in Q1 2018 and adapt to the increasingly digital and direct-to-consumer gaming economy.
With the company's upcoming Q2 2018 earnings on Thursday post-market, with current expectations being that it will continue showing some decline by most metrics in terms of earnings and sales, it remains to be seen whether the company's report shows any signs of life for GameStop's long-hoped turnaround.
I think that the company is at a rough spot at the moment and has not shown major signs of serious renewal that would justify an earnings-related boost. While GameStop still has a potential growth future that it may still have the chance to adapt to; at the moment, its strategy of merely looking at smartphone hardware sales are bandages on a sinking ship rather a real long-term plan for stability and expansion.
