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Author: Germanics One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 216  
Subject: The Fundamentals Behind GameStop Date: 10/2/2010 8:15 PM
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"There's nothing wrong with being a Noob in GME"
02 Oct 2010

The following is an article I've written to enlighten investors with making a decision of why they should buy into GameStop (Ticker: GME)

-The Cover-
It would seem 'Game Stop' (Ticker: GME) is trading just off it's 52 week lows of 17.12; closing up at 20.00 a share on Friday [10/01/10]. During the last 52 weeks 'Game Stop' has seen it's share price go as high as 28.62 a share. You're probably thinking, 'Right, we know this, tell us something we don't know.'

-Introspective-
Let's take a closer look at game developer company Bungies latest release in the highly acclaimed 'Halo' series - 'Halo : Reach'. In an article dated 9/16/2010 MSNBC reported that 'Halo: Reach' "had racked up $200 million in global sales on its launch day, building strong momentum for the November debut of the Xbox 360 maker's new gaming system." Microsoft Game Studios, Vice President Phil Spencer said "A lack of blockbuster games was to blame for the industry slow down of sales." He also further commented, "In fact, that we are exceeding 'Halo 3' numbers out of the gate tells me that the industry is in a healthy state and the $200 million figure made "Reach" the biggest launch of any game or movie this year. In comparison "Halo 3" only garnered more than $300 million globally in its first week. In conclusion gamer's are willing to buy games worth the dollars when they are released, despite current economic outlooks.

Microsoft will begin selling its "Kinect" full-body motion-sensing game system in time for the holidays from Nov. 4, 2010. Sony also will see sales of it's Move" motion-controlled gaming system released on Sept. 15 during the holiday seasons.

While it's true other outlet's and venues are available for purchasing the blockbuster titles and new gaming console gear being released this year, you can be rest assured, that GameStop (Ticker: GME) will have it's fair share of pie from projected sales during the upcoming holidays. Be sure to keep an eye out for projected sales of some these key gaming titles being released and sold over the next few months.

Mafia 2 - Released August 24, 2010
FIFA II - Upcoming Release October 12, 2010
Gran Turismo 5 - Upcoming Release Nov 2, 2010
Call of Duty : Black Ops - Upcoming Release November 9th, 2010
Assassin's Creed: Brotherhood - November 16th, 2010

-The Technicals-
On Tuesday September 14th, 2010 ("Halo: Reach" sales launch day) shares of GameStop (Ticker: GME) opened trading at 18.71, reaching a high for the day of 18.99 and closing at 18.61 a share on 3,042,700 volume. I point this figure out to ensure everyone understands just how grossly undervalued this stock was trading at that time. During the holidays of 2007 this stock traded as high as $62 a share. In 2008 the price plummeted as did the overall market as a whole. What further lead the stock down was a lackluster sales in gaming titles due to consoles wars brought out by Nintendo, Sony, and Microsoft. Now that the consoles have found their niche in player's, it's time for game developer's to come on board with the release of hit game titles, which should improve the overall model for sales with retailers like Gamestop (Ticker: GME).

-The Fundamentals-
Last Quarter's earnings for GME brought in 0.26 a share with the current Quarter EPS estimates at 0.37 a share. Currently 8 analyst hold a 'Buy' recommendation on GME. The stock has been rated as 'Overweight' which means that some portfolio manager's are holding upwards of 25% of their funds in this particular stock. (A strong bullish indicator) The downside is these fund manager's will take their profits when they meet their sale points. The upside is 'Gamestop' (Ticker: GME) will more then likely break Quarter Estimates and beat the year end estimates of 2.62. Pay close attention to the Quarter 3 conference call for an indicator that this might happen.

-The Wrap-
While GameStop sales were sluggish over Q2, you can bet Q3 and Q4 2010 will more then likely make up for this. The boat is still docked making it's final call for boarding before launch. Even then, paddle boats can still make it to the ship for boarding while it ramps up steam. As always do your own due diligence in researching stocks before making investment decisions. I make my decision through a combination of technical and fundamental factors prior to every investment. (Although to be honest I only covered the basics here). My final sentiments are GME will run up during the next two Quarter's of 2010. However, I expect some pull back at some point, which only provides a better entry price. Good luck and happy investing.

Article Written By: J.P. Germanic (Hardcore Financial Analyst)
'Putting a New Spin on Market Investing for the Next Generation'


Source Links Used for this article:

Slodkowski,Antoni ; Sachi Izumi, Sachi., ed."Halo: Reach' sales hit $200 million on first day." MSNBC.
http://www.msnbc.msn.com/id/39210229 (02 Oct 2010)

Peckham, Matt., ed. "Halo: Reach Breaks Halo 3 Xbox LIVE Record, Probably Sales Too." PCWorld.
http://www.pcworld.com/article/205488/halo_reach_breaks_halo... (02 Oct 2010)

Web Article., ed. "Top Video Games for the Holidays 2010." Chiff.
http://www.chiff.com/a/video-pc-game-awards.htm (02 Oct 2010)

FactSet JCF S.A.S., ed. "Gamestop Corp." MarketWatch.
http://www.marketwatch.com/investing/stock/GME/analystestima... (02 Oct 2010)
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