GameStop Corp. shares fell more than 12% in the first hour of Friday’s session after the company missed second quarter earnings estimates while reaffirming fiscal year 2018 guidance. This bearish price action cut through at a key level that bulls need to defend in coming days to avoid a steep downtrend from getting worse and dropping the gaming-based brick-and-mortar retailer to the lowest low in more than five years.
New gaming systems have shifted to download and cloud-based media formats in recent years, denying profits from new and used disc-based game sales that have kept the retailer afloat in recent years. Heavy competition from Amazon.com, Inc. and privately held Newegg have also eaten into revenues, while mall foot traffic has contracted due to the ongoing exodus out of brick and mortar onto online sales portals. (See also: How the Video Game Industry Works.)
GameStop came public in February 2002, opening at $9.63 and grinding sideways into the May high at $12.15. A decline into the first quarter of 2003 posted an all-time low at $3.75, ahead of a strong recovery wave that reached the post-IPO high at the end of 2004. A breakout into 2005 caught fire, lifting the stock in a powerful trend advance that continued into the 2007 all-time high at $63.77. (For more, see: GameStop: Why It Might Be Game Over.)
The stock built a topping pattern into September 2008 and broke down during the economic collapse, dropping into the mid-teens, where it bottomed out in December. The subsequent recovery wave failed to generate substantial buying interest, stalling at the 50% sell-off retracement level and yielding multiple failed breakout attempts into 2012, followed by a steep decline that undercut the 2008 low by nearly two points.
Read more here: Game Over for GameStop Bullls
Category: GME, AMZN, BBY