Still, if it's 4K gaming you want, this is as good as it's going to get this holiday season. That's a great deal in itself, though it could be a precursor to a potential price drop next year. GameStop is one of the few Black Friday retailers that is offering a discount on the PlayStation 4 Pro, slashing the price down to $349. "GameStop's got about 10 years before that ice cube is fully melted.First off, let's talk hardware. And for sure their future will be truncated and eliminated the day that discs stop being manufactured."īut that doesn't mean the disc-based business model is leaving just yet - with new consoles from Microsoft and Sony coming in 2020 that play discs, "they just got a seven-more-year reprieve starting in 2020," Pachter said. "For sure it's going to go away eventually. "I definitely think it's a melting ice cube," Pachter said of GameStop's disc-based business model. That said, the world in which Sam Goody and Tower Records did good business selling music and movies on physical media (read: discs) is long gone.īut that doesn't mean the business model is dead. You could, of course, just stream music through one of several services, or you could buy a digital version of whatever album. In 2020, you can still buy music on compact discs and movies on Blu-ray discs. The company "went from no debt and generating about $400 million in cash, to $800 million in debt and generating $300 million in cash," he said. "I estimate they spent about $1.5 billion buying all these stores - $700 million in cash and $800 million in debt - and ended up selling for $700 million," Pachter said.
By 2018, when Spring Mobile was sold for $700 million, the company was swimming in debt. They were just never even close."īefore the acquisitions, GameStop had cash in the bank and zero debt. So $150, $200 million profit, and I think they got to $80. So with 1,500 stores you're looking for $1.5 billion in revenue and double-digit margins. "These stores were going to do a million apiece. "It turned into a complete disaster," Pachter said. And when they didn't generate that kind of money, they quickly became an expensive liability. Those stores were expected to generate about $1 million apiece. By 2016, GameStop owned and operated just shy of 1,500 mobile-phone stores under the Spring Mobile name. "And then the earnings went down as soon as they bought them."įirst, there was Spring Mobile, followed by the purchase of hundreds of storefronts from AT&T. "They just kept buying chains, and they were paying top dollar," Pachter said.
In 2013, GameStop embarked on a new initiative: smartphone stores.
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