I have not been shy about my lack of faith in the durability of GameStop's (NYSE:GME) business model. That said, one of the worst mistakes any investor can make is to just past judgment on a company, assume you will always be right and never re-examine the story or your own assumptions. When I look at GameStop, I still see a lot of problems, but I also see how the stock may well be something of a value today.
Rehashing the Old
My original (mostly negative) thesis on GameStop ran something like this. Used game sales are a major component (more than 40%) of gross profit and the ongoing expansion of digital distribution by Electronic Arts (Nasdaq:EA), Activision Blizzard (Nasdaq:ATVI) and Take Two (Nasdaq:TTWO) should shrink that pipeline. Moreover, it wouldn't shock me to see a company like Best Buy (NYSE:BBY) at least entertain the idea of competing in that space, in an attempt to drive store traffic.
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