Bail Out Ahead of Earnings, Says Analyst About GameStop Stock

The Lowdown

Get ready to 'bail out' of GameStop stock before it tanks, warns an analyst.

Wedbush analyst Michael Pachter has downgraded GameStop stock to 'neutral' from 'outperform', advising investors to sell before the company's upcoming earnings report.

Pachter predicts a disappointing quarter for GameStop, with revenue and earnings below expectations.

Why the Downgrade?

Falling Sales

GameStop's sales have been on a downward spiral in recent years, due to declining demand for physical video games.

The company's revenue has fallen by over 20% in the past three years, and this trend is expected to continue.

Pachter believes that GameStop's sales will continue to decline as more gamers move towards digital downloads and streaming services.

Stiff Competition

GameStop faces increasing competition from online retailers such as Amazon and Walmart, as well as digital platforms like Steam and the PlayStation Store.

These competitors offer a wider selection of games, lower prices, and more convenient shopping experiences.

Pachter believes that GameStop will struggle to compete against these online behemoths.

Limited Growth Opportunities

GameStop has limited opportunities for growth, as the video game market is becoming increasingly saturated.

The company's attempts to diversify into other areas, such as collectibles and merchandise, have not been successful.

Pachter believes that GameStop's growth prospects are bleak.

The Bottom Line

Pachter's downgrade is a clear warning to investors that GameStop stock is a risky investment.

Investors should consider selling their GameStop shares before the company's earnings report, to avoid potential losses.

GameStop faces significant challenges in the future, and it is unlikely that the company will be able to turn around its fortunes.