Game Stop: What's wrong?

Later, the name "GameStop" was widely discussed by the public because the stock price jumped dramatically.

In fact, in the past month, the share price of GameStop Corporation (GME) reached more than 1,000 percent and touched a peak of $468 per share on the New Yotk stock exchange, U.S. (NYSE), based on Marketwatch information.

For the unfamiliar, GameStop Corporation is a consumer electronics company engaged in the retail segment. The business is the sale of various game trinkets through the store.

The grapevine, Texas, U.S. company houses retail stores around the world, including EB Games, ThinkGeek, and Micromania-Zing, to GameStop itself.

The various products sold through the GameStop retail network are mostly consoles, video games, and other similar electronic devices. GameStop Corp. It also has a magazine about video games called Game Informer.

From Babbage's turn into GameStop

The history of the birth of GameStop dates back to 1984, when the name was still "Babbage's". Babbage's is a software store located in Dallas, Texas, USA.

In 1994, Babbage's merger with another retail company, Software Etc., gave birth to a new company called NeoStar Retail Group.

About two years after that, the company was renamed Babbage's Etc. and launched dozens of flagship retail stores under the name "GameStop", along with GameStop.com site.

In 1999, Babbage's Etc. was acquired by the barnes &noble booksellers. A year later, the company also acquired another video game retailer, Funco (fun), which was later renamed GameStop.

In 2004, GameStop became an independent company under its own name due to a change of shareholding. 

Barnes & Nobles Booksellers listed GameStop as a public company (IPO) in 2002 under the symbol GME. According to the Macrotrends website, GME's share price was worth about $6 per share.

In its "heyday" after the IPO, GameStop acquired a number of companies and retail stores, such as EB Games, Rhino Video Games, Free Record Shop, Micromania (Micromania-Zing), Kongregate, Spawn Labs, to Simply Mac (ThinkGeek).

Because of these acquisitions, GameStop managed to spread its wings outside the U.S., such as in Canada, Australia, New Zealand, to Europe. As of February 2020, the number of GameStop retail stores worldwide was recorded at 5,509 stores.

The heyday of GameStop slowly began to extinguish after customers began to switch to various digital video game stores, such as Xbox Live, PlayStation Network, Nintendo eShop, Steam, Epic Games Store, and so on.

This market change made GameStop's sales performance decrease by a dozen to tens of percent in the period 2016 - 2018.

Close hundreds of stores

This strategy does not seem to have worked and forced GameStop to close hundreds of stores scattered around the world. The number of stores closed in 2019 is claimed to reach 321 stores.

The store closures continued until the following year. As of October 2020, GameStop is said to have closed about 462 stores.

The company will also close more than 1,000 additional stores worldwide by April 1, 2021.

This is triggered by the sales performance of the store itself continues to langast, plus the Covid-19 pandemic that forced consumers to not be able to visit the store.

However, GameStop's online sales have reportedly skyrocketed by hundreds to thousands of percent in the last few months.

In the company's fiscal report on the year-end holiday that ended in early January (Q3), for example, online sales were claimed to increase 309 percent. Total sales decreased 3.1 percent due to a decrease in store performance, as well as the effect of store closures earlier.

However, GameStop is optimistic that its business performance will again rise in Q4 which ends in March, triggered by sales of the latest generation console, PlayStation 5 (PS5) and Xbox Series X / S.

GameStop's share price rises dramatically

Despite the financial statements that continue to langer, GameStop's stock price recently continued to rise and touched its peak at 468 US dollars per share, shortly after the opening of trading, Thursday (1/28/2021).

However, after the close of trading on the same day, the price dropped to around $200 per share.

GME's own stock price has fluctuated in recent weeks, sometimes up, sometimes down in a fairly short period of time.

According to most reports, this is due to pressure from two sides of investors, namely amateur investors on the internet, such as on the sub-forums Reddit and Twitter, and investors in assets on Wall Street (hedge funds).

These amateur investors rely on stock applications such as Robinhood, flocking to buy GameStop shares because it is triggered by positive sentiment (predictions of rising stock prices) from preferred investors, such as Chamath Palihapitiya. 

While hedge funds, which have negative sentiment (stock price predictions down) reportedly continue to experience losses because they are forced to buy stocks whose prices are rising, as compiled by KompasTekno from Business Insider, Sunday (1/31/2021).

This "war" between the two sides then made GameStop's stock price rise dramatically. Currently, Gamestop's share price after the close of trading on Thursday (1/28/2021) is recorded at 300 US dollars per share.

Regarding Gamestop shares, analysts reminded investors to be careful to buy the stock.

Because, if the increase is significant and only takes a few days, the stock price can also decline sharply in a fairly short time.