The world's biggest video game retailer, GameStop, is dying: Here's what led to the retail giant's slow demise
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- GameStop is, by far, the world's largest video game retailer.
- For years, the company has been in steady decline. And in 2019, the bottom dropped out of its stock price - from $16 per share in January to just $5 by July.
- The company is "a melting ice cube," Wedbush analyst Michael Pachter told Business Insider. "For sure it's going to go away eventually."
- Here's how GameStop ended up in such dire straights.
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The world's biggest video game retailer, GameStop, is in serious trouble.
In the last six months, the company's stock value dropped by two-thirds - from around $15 in January to just $5 by July - and it completely reshuffled its C-suite.
Like Blockbuster Video and Tower Records before it, GameStop is the latest retailer facing major challenges to its business model from the internet. As more video game buyers purchase games through digital storefronts, fewer than ever are buying games on physical discs from GameStop.
But that's far from the only issue with the company, which has suffered a staggering series of self-owns through poor acquisitions, half-hearted initiatives, and an inability - or unwillingness - to evolve.
The problems began in 2013.
At the same time, GameStop took a big bet on an expensive new business: Spring Mobile. Then, it doubled down on that bet.
By 2018, GameStop was looking for buyers from private equity — but potential buyers couldn't convince financiers that GameStop was a smart buy.
After GameStop announced its inability to go private, its stock fell off a cliff: The price per unit is currently at just over $5 per share, putting GameStop's value at just over $500 million.
But don't count GameStop out: With new consoles on the horizon that still play game discs, GameStop's business model isn't completely out the door just yet.
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