Shares of video game retailer GameStop took a hit on Friday after the company reported downbeat revenues during a nine-week holiday period and analysts at Macquarie downgraded the stock.
GameStop shares fell 8.1 per cent to $22.73, taking its losses over the past year to 11 per cent, after the company said like-for-like sales tumbled 18.7 per cent, though the decline slowed from a 26.6 per cent drop in November to 13 per cent the following month.
Total global revenues fell more than 16 per cent to $2.5bn.
The Texas-based retailer attributed the drop to weak Call of Duty: Infinite Warfare and Titanfall 2 sales and aggressive discounting on its consoles during Thanksgiving Day and Black Friday.
Paul Raines, chief executive, said he was “disappointed” with the results but expects its non-physical gaming business to grow.
He added that the company was “focused on our transformation plan, which includes growing our non-gaming businesses, right-sizing our global store portfolio by continuously evaluating non-productive stores for closure, and maintaining strong financial discipline, including reducing SG & A by $100m by 2019”.
Sentiment on the stock soured further after analysts at Macquarie downgraded the stock to “neutral” from “buy” and cut the price target to $23 from $27.
“The bottom line is that GameStop is fighting to diversify into new businesses as the core console game industry faces challenges,” said Ben Schachter, an analyst at Macquarie.
He added: “While the shift to digital is reasonably well understood, our caution on GameStop has more to do with uncertainty around core franchises, new hardware, and used. We simply do not have confidence that GameStop or anyone can accurately forecast console market growth in 2017 and beyond.”
The sell-off came as bank results helped lift US stocks higher. At the close in New York, the S&P 500 was up 0.2 per cent to 2,274.6, and the Dow Jones Industrial Average was flat at 19,885.7. Meanwhile, the Nasdaq Composite rose 0.5 per cent to 5,574.1.
The S&P 500 financial sector was the biggest gainer on the benchmark index, rising 0.6 per cent, after JPMorgan and Bank of America said profits jumped in the final quarter of 2016, sending their shares up 0.5 per cent to $86.70 and 0.4 per cent to $23.01, respectively.
Meanwhile, Wells Fargo rounded off a difficult year with a drop in fourth-quarter earnings but its shares advanced 1.5 per cent to $55.31.
Elsewhere, BlackRock shares rose 0.3 per cent to $379.35 after the asset manager posted better than expected fourth-quarter profits and said net inflows reached a record $202bn last year, even as revenues for the quarter missed analysts’ estimates.
Shares in Monster Beverage jumped 3.3 per cent to $44.51 after a number of analysts signalled increased confidence in the company after its investor meeting after the market close on Thursday.
“We walked away even more confident in the key elements of our positive thesis, including the transition to the Coke distribution system internationally and the rollout of Mutant,” said Laurent Grandet, an analyst at Credit Suisse. Mutant is the drink Monster launched last year to rival Mountain Dew.
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