The world’s largest retailer of video games and their accessories, GameStop Corp. (NYSE:GME), has grown its revenues incredibly over the last decade (see below). Shareholders have been rewarded nicely, with shares rising from a low of $3.75 in 2004, to the current level of around $25. However, after several years of slow growth, followed by a decline in revenues during the current fiscal year, is the time right to buy GameStop, or should investors run away?
GameStop Corp. (NYSE:GME) operates almost 7,000 stores worldwide under the brand names GameStop, EB Games, and Micromania. The company sells new and used video game hardware (like consoles, controllers, etc.) and software. The company also publishes Game Informer magazine, which is the largest video game magazine in the U.S. with about 5.7 million subscribers. In my opinion, it is their used equipment business that allows GameStop to be competitive with online retailers such as Amazon.com (NASDAQ:AMZN). While GameStop will never be able to completely price-match on new equipment (this has been the thorn in the side of physical retailers over the past decade or so), they will still sell a sufficient amount of new equipment through the traffic in their stores generated by used video games and accessories.I know what you’re thinking: Amazon sells used video games too! That is true, and often times the pricing is less than at a GameStop store. When buying a new PlayStation 3, consumers know that they are getting the exact same thing whether they buy online or at the store. With used video games (or anything used for that matter), the quality of the product varies tremendously. For that reason, being able to physically see the condition of the items in the store is a huge advantage. The used business is what has kept GameStop growing in the changing retail environment, but why do I think the company will again be able to grow its revenues going forward? The simple answer: The current consoles are getting old. The two most popular video game consoles right now are the PlayStation 3, made by Sony (NYSE:SNE) and the Xbox 360, made by Microsoft (NASDAQ:MSFT).
Greenlight Capital's 2014 Q1 investor letter is out. You can download the pdf of the letter here: Greenlight Capital 2014 Q1 Investor Letter. David Einhorn revealed two new positions in US companies:...... (read more)
Carl Icahn has again set his sights on Navistar International Corp (NYSE:NAV) and has increased his investment in the stock. Icahn Capital has reported the addition of approximately 1.02 million shares...... (read more)
Bill Gates' Cascade Investment has disclosed a significant position in Coca-Cola FEMSA, S.A.B. de C.V. (ADR) (NYSE:KOF). According to a newly amended filing with the SEC, Cascade Investment holds a total...... (read more)
I am not a member of a "Warren Buffett cult" that thinks Warren Buffett is an investing God. I admire Warren Buffett for the right reasons. I will explain why I am a big Warren Buffett fan in a little...... (read more)
According to our research, stocks bought by insiders demonstrate a small outperformance effect, which seems logical given the fact that insiders are the most knowledgeable about their respective companies...... (read more)
In looking through the historical 13F filings of Warren Buffett’s Berkshire Hathaway, we calculate that his mid-cap stock picks (those with market caps between $10 and $20 billion) returned 0.37% per...... (read more)
We analyzed the historical 13F filings of Greenlight Capital, managed by David Einhorn, and our analysis showed that his large-cap stock picks returned 0.4% per month between 2008 and 2012. This number...... (read more)
Bill Gates' investment arm, Cascade Investment has revealed holding a 6.0% stake in Thai Fund Inc. (NYSE:TTF), which contains around 772,000 shares. Overall, Mr. Gates, through Cascade and Bill &...... (read more)
In two new filings with the SEC, Steven Cohen and his hedge fund SAC Capital Advisors revealed adding Midstates Petroleum Company Inc (NYSE:MPO) to their equity portfolio and boosting their passive...... (read more)
Warren Buffett's Berkshire Hathaway redeemed an aggregate of $56.17 million worth of Convertible Senior Notes of USG Corporation (NYSE:USG), shortly after the latter announced its Notice of Redemption...... (read more)