David Weinstein
Value

GameStop's FY12 Holiday Sales Are A Red Flag For Investors Betting On Cyclical Growth

Over the past three months, GameStop (NYSE:GME) has traded between $22 and $28 and currently sits near the ~$25 midpoint. Disappointing holiday sales figures released in early January confirmed the ongoing negative trend in the physical video game market. In recent weeks, the stock has shrugged off that report. GME has a number of sell-side defenders who, to their credit, have been quite right since last summer's lows (~$15).

I've been negative on GME since late October (at $23/share), suggesting then a long-term short would pay off by 2H13 / 1H14. I believe this thesis remains intact, and investors betting on a return to growth in the new console cycle are mistaken. While GME, with a forward P/E...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details