GameStop Tumbles on Video Game Sales
NEW YORK (
) -- Video games finally saw a boost in September after six straight months of declines, but
GameStop
(GME) - Get GameStop Corp. Class A Report
, one of the biggest video game retailers, is nonetheless one of the biggest losers of the day.
Shares of GameStop are plunging 7.5% to $26.03 in early afternoon trading after it was downgraded to neutral from buy.
Janney Montgomery Scott analyst Tony Wible said the weak near-term outlook for video game sales puts GameStop on track to report a 4% drop in third-quarter sales, down from his previous estimate of a 3.1% gain.
Wible said he fears GameStop will have to rely more on discounted games to drive traffic to stores rather than full-priced new titles.
On Monday evening, the NPD Group, a market research firm, said video games in September inched up 1% to $1.27 billion, but this was still well below Wall Street's forecast. Year-to-date sales are down 13%.
Sales of video game hardware tumbled 6% to $472.3 million, and for the first time since its launch three years ago,
Sony's
PlayStation 3 was the winner, selling more units than
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Nintendo's
Wii and
Microsoft's
(MSFT) - Get Microsoft Corporation Report
Xbox 360.
Sales of Playstation 3 more than doubled from last year, mostly due to price decreases. Sony cut prices on the unit by $100 in August.
Shares of Sony are tumbling 1.9% to $28.96, while Microsoft is down 1.3% to $26.02 in morning trading.
Next: Netflix Benefits as Game Makers Cut Prices
-- Reported by Jeanine Poggi in New York
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