GameStop Earnings Preview: What We're Watching Thursday

| About: GameStop Corp. (GME)

As GameStop (NYSE:GME) prepares to announce its Q3 earnings on November 17, [1] investors and analysts will be keenly watching the impact of a decline in both new video game software and new video game hardware for the quarter. [2] Additionally we will also follow the updates on GameStop’s endeavors in smartphones and tablets, which includes GameStop’s release of Kongregrate Arcade 2.0 as well as the launch of its Android tablet. GameStop is a leading retailer of new and used video-gaming products competing with the likes of Wal-Mart (NYSE:WMT), Best Buy (NYSE:BBY) and Amazon (NASDAQ:AMZN)

We have a $33.70 price estimate for GameStop stock, which is nearly 35% above the current market price.

GameStop’s shares registered a decline on Monday, after The NPD Group reported a decline in both new video-game software and hardware sales for the company. However we believe the impact will not be that significant, as GameStop earns nearly half of its profit from used video game products. The scenario is very much like the last quarter, when the company gained even after reporting a decline across new video game software and hardware, benefiting primarily from the growth of its pre-owned sales and digital business.

GameStop pushing itself in Smartphones and Tablets Business, updates to watch out for

With both smartphones and rablets emerging as serious platforms in the industry, video-gaming will not remain confined to traditional platforms such as Consoles and Handhelds. One of the major reasons behind the speculations of GameStop going Blockbuster's way is that as the video-gaming industry landscape changes from retail to digital, the video-gaming retailers such as GameStop will be the first to die. The company also seems to be aware of the threats and is actively pushing itself in the digital business.

While the release of Kongregrate Arcade 2.0 was to tap into swelling android smartphones user base, the company is partnering with tablet manufacturers such as Acer and Motorola for its customized tablet to woo the consumer during the holidays. [3].

  1. GameStop to announce Q3 results on November 17th, Source: GameStop IR
  2. The NPD Group reports decline in GameStop’s new video game software and hardware sales, Source: Market Watch
  3. GameStop brings its customized tablets during the holidays, Source: Appoloicious

Disclosure: No positions