Jan 30, 2019

Video game stores are the new record stores

Dan Primack, author of Pro Rata

GameStop shares sunk more than 27%. Photo: Smith Collection/Gado/Getty Images.

GameStop, a Grapevine, Texas-based video game retailer, said it has abandoned efforts to sell the company after failing to get an adequate bid, sending shares down more than 20%.

Why it matters: Because this seems to validate short-seller arguments that physical retail for video games is anachronistic, as more and more product is downloaded directly via mobile and consoles. There had been some hope that a buyer would bet on increased interest in things like VR hardware and collectibles, but apparently not.

GameStop shares sunk more than 27% on the news, giving it a market cap of just $1.15 billion. Overall, company shares have lost more than 75% of their value since late 2015.

The bottom line: Video game stores are the new record stores.

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