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Image courtesy of GameStop.

Changing Their Mind

We reported on Gamestop’s possible purchase by a private company last week. The sale could have happened as early as February. Now the gaming company is backing out of the idea due to the financial backlash. GameStop appears to be struggling to tread water left and right. The company’s options are shrinking and things aren’t looking good.

More Financial Hardship

Once the Wall Street Journal reported the possible sale, stocks for Gamestop plummeted by 27%. Several companies were looking to buy GameStop, from Sycamore Partners to Apollo Global Management. Even it’s subsidiaries such as ThinkGeek and Game Informer have been the target of buyout.

According to the official announcement by Gamestop, the company is no longer looking to sell. “GameStop’s Board has now terminated efforts to pursue a sale of the company due to the lack of available financing on terms that would be commercially acceptable to a prospective acquirer.”

Image courtesy of Bentley Mall.

What Now?

Selling their subsidiary Spring Mobile this January generated approximately $735 million in immediate cash proceeds. They hope to use this money to reduce outstanding debt, fund share repurchases, and reinvest in core video game and collectibles. Spending this money wisely could help the company, but will it be enough?

If GameStop isn’t going to sell, it will have to work hard to try and stimulate the interest of investors again. A push forward in the right direction would be getting a permanent and capable CEO, which they are currently looking for.

GameStop has a lot to answer for. The response to our previous article included a lot of backlash from the community. Many people are frustrated that GameStop makes such a huge profit off their used games. Some would like to see GameStop selling and buying used computer parts. I personally would like to see them moving out of tiny shopping centers in order to have enough room to host tabletop games.

Will GameStop survive? Let us know what you think in the comments below.