GameStop has failed to secure a buyer
The struggle continuesBy Eric Hamilton 7 comments
In context: GameStop, the long standing brick-and-mortar game shop, has been in financial trouble for some time as they've fought changing headwinds in the market. They announced this week they've failed to secure an acquisition, and have concluded their search. An outdated core business, no clear turnaround strategy, and lack of a CEO are presumably keeping buyers away from the once popular game shop.
Back in June 2018, GameStop began exploring options for a buyout. However, in a recent press release, the company announced that the search for a buyer has ceased, citing "lack of available financing on terms that would be commercially acceptable to a prospective acquiror."
GameStop doesn't elaborate on what exactly that means, but as The Motley Fool highlights, it's likely a combination of unfavorable interest rates and GameStop's significant long term debt.
In a time when digital distribution and the advent of game streaming is eroding physical sales of games, and diluting the pre-owned market, it's likely potential buyers don't see GameStop as a viable investment. GameStop also didn't lay out what the lack of a buyer means for the company; suffice it to say, their long term viability is in question. GameStop did divest their Spring Mobile Business, and the resulting transaction brought in around $735 million for the company. GameStop is evaluating how to best invest those proceeds.
GameStop is also without a CEO, after Michael Mauler left after only three months on the job. GameStop asserts that "the Board is continuing its search process to appoint a highly qualified, permanent CEO and is working with a leading executive search firm."
After the announcement, GameStop's stock price took a nosedive, hitting a 14-year low.