This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Are GameStop Shares Sinking?

Stocks in this article: GME WMT

NEW YORK (TheStreet) - GameStop (GME) shares were sinking 4.7% to $37.88 on Tuesday after Wal-Mart (WMT) announced it was about to creep onto the video game retailer's trade-in and pre-owned business.

Walmart said that it was launching a video game trade-in program, in which the big box retailer will go after the $2 billion used video game market. 

Starting March 26, approximately 3,100 U.S. Walmart stores will begin accepting video game trade-ins. The traded-in games will be sent to be refurbished and made available for purchase in like-new condition both online and in stores. The video games will be labeled "Certified Pre-Owned," which means the product is fully refurbished and in like-new condition, Walmart says.

"We're going to shake up the market place," said Duncan Mac Naughton, chief merchandising and marketing officer for Walmart U.S., in a conference call with reporters. "We're not participating in the $2 billion used gaming industry at all."

The move will place pressure on Best Buy (BBY)and Amazon (AMZN), but it will especially hit GameStop as the Grapevine, Texas-based company formed a niche selling video games and gaming hardware.

"This WMT news will very likely represent the latest worry for GME investors and make for another weight upon shares at least near term. WMT is retailing's '800 lb. gorilla,' and we cannot discount any of its moves," Oppenheimer analyst Brian Nagel wrote in a note to clients.

That said, any "buy-sell-trade" model is "notoriously difficult for even seasoned retail chains to execute," Nagel said. "GME has been successful in the business for a long time. We are very hesitant to discount meaningfully the dominance of GME in the category, even against WMT. The market has worried that used video games might become the next 'dinosaur' in consumer products. We view WMT's move into the category as a validation of the category's longevity." Oppenheimer's Nagel rates GameStop at a "outperform."

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs