Do GameStop Corp. (GME) Investors Have Any Hope?

As if this weren’t enough, it looks as if game developers themselves also want to get into the action, which would only serve as a nail in GameStop’s proverbial coffin. Electronic Arts Inc. (NASDAQ:EA), for example, has been one of the most vocal game makers in this space. EA Labels President Frank Gibeau has said, “We’re going to be a 100% digital company, period. It’s going to be there someday,” adding “It’s inevitable.”

If this truly is the case, we can assume that competitors like Activision Blizzard, Inc. (NASDAQ:ATVI) and Take-Two Interactive Software, Inc. (NASDAQ:TTWO) won’t be far behind, squeezing GameStop even more.

While the company does hold a dominant position in the used videogame market—about 80%—we wouldn’t bet against the multitude of gusts blowing straight in the face of GameStop. At a lowly 6.7 times forward earnings, this stock looks more like a value trap than a value play, even if it is cheaper than most of the game developers—Activision (11.7x), Electronic Arts (11.9x)—and the console makers Microsoft (8.4x) and Sony (12.1x).

Heck, even though GameStop pays a 4.3% dividend yield, which is above Activision (1.6%), EA, Take-Two, Microsoft (3.4%) and Sony (2.7%), we still wouldn’t bet on the return outpacing this stock’s depreciation.

In the hedge fund industry, it appears that some of the biggest players agree. Ken Griffin (-61%) (see Ken Griffin’s other moves here), Paul Tudor Jones (-68%), the duo of John Overdeck and David Siegel (-67%), and D.E. Shaw (-79%) (see D.E. Shaw’s top picks) were all trimming their positions quite significantly in the last 13F-filing period.

For more GameStop coverage, check out the stock’s profile page on Insider Monkey.

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