Wedbush lowers GameStop target, sees ‘demise’ later in decade

Wedbush lowered the firm’s price target on GameStop to $5.60 from $6 and keeps an Underperform rating on the shares following the Q4 report. Despite a quarter that featured an extra week and modestly positive industry trends, GameStop delivered a large sales decline as it continues to deal with a mix shift in software sales, declining hardware sales, fewer large console releases, and the growth of subscription services, the analyst tells investors in a research note. The firm says the “silver lining” is that the company’s cash burn and losses appear to be manageable going forward. With its current cash balance, JPMorgan believes GameStop can weather $100M of annual losses for a decade or more. However, the firm believes GameStop has a likely runway of no more than five years given its revenue declines. Wedbush expects “the company’s demise at some point later this decade.”