GameStop Stock Downtrend Is Intact: The End Game Draws Near – Microsoft (NASDAQ:MSFT), GameStop (NYSE:GME) | Gaming

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Shares of GameStop GME have been trending lower ever since the meme stock frenzy first spiked, and the downtrend is intact. The company continues to bleed business and cash, putting it in a downward spiral, and investors should flee. The stock is still tradable, but bullish traders beware; one day’s gains will likely turn into losses tomorrow, next week, and next year.

As appealing as the business model is, it relies on a niche, after-market business that has yet to produce sustainable growth or profitability and probably never will. If you are wondering what the end-game for this stock is, the most likely scenario is to revert to the pre-meme price points below $5.

No Game In GameStop Q4 Results

GameStop had a weak quarter in Q4, missing the consensus estimates on the top and bottom lines. The company brought in $1.79 billion in net revenue for a decline of 19.7% YOY that missed the consensus by 1200 basis points as clients cut back on hardware, software, and collectibles.

Hardware posted the smallest decline, 12% YOY, led by a 25% decline in collectibles and a 30% contraction in software. Sales are impacted by inflation and interest rates, which are pinching consumer discretionary dollars, and there is the AI factor to consider.

With AI on the rise and expected to be embedded into games and consoles, the gaming market may sit back and wait for next-gen equipment rather than double down on the old stuff. As it is, the next-gen consoles aren’t expected to be launched for a few more years. However, tech leaders Microsoft MSFT and Sony SONY are expected to release intermediate upgrades in the interim.

Margin is a brighter spot in the report but insufficient to alter the outlook. The company improved the margin sequentially and turned cash flow positive for the quarter, but the full-year results and impact on the balance sheet are less than savory…

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