GameStop said Tuesday that its board has decided it's no longer for sale and investors who held shares waiting for a transaction are selling the stock.
The Texas-based video game retailer cited "a lack of available financing on terms that would be acceptable to a prospective acquirer."
GameStop, which operates 5,800 stores in 15 countries, apparently was seen as too risky by lenders. Private equity firms, which were rumored buyers, have had a poor track record with retail companies. Most of the recent retail bankruptcies had leveraged-buyout debt on their balance sheets.
Now, the company is going it alone and again actively looking for a permanent CEO, GameStop said. Shane Kim, a board member since 2011 and a former Microsoft executive, has been interim CEO.
The stock, which closed at $15.50 a share, was trading more than 20 percent lower Tuesday. GameStop is expected to post a profit of $1.59 a share on sales of $3.28 billion in the fourth quarter, according to analysts surveyed by Refinitiv. The company said it will report year-end results in late March.
Wedbush analyst Michael Pachter said in a note published Tuesday that "the future may not be bleak for the company."
GameStop should be a primary beneficiary from upgraded video game consoles in 2020 and 2021 and the retailer remains the dominate force in the video game industry's pre-owned business, Pachter said. He lowered his price target on the stock to $15 a share from $18.
GameStop announced in June 2018 that it was considering alternatives, including the sale of the company. Last week it completed the sale of its 1,284 AT&T Wireless stores for $735 million. That sale was a result of the board's strategic review. GameStop's board had consistently said there was no guarantee that a sale of the entire company would be completed.
The board is evaluating how it's going to use the money, GameStop said. It listed options that would include reducing the company's $800 million in debt, repurchasing shares, investing its core video game and collectibles business (ThinkGeek) or a combination of those moves.
