Shares of GameStop (NYSE:GME) were up 7.4% in afternoon trading on Monday after CEO Paul Raines told CNBC that sales at stores that were Gyms in the app were up 100%.
Our team has taken note of the clear impact that Pokémon Go has had on Nintendo (OTC:NTDOY) stock. The game has taken the world by storm and is the fastest to ever reach No. 1 in mobile revenue charts, and for good reason. Millions of people have taken to the streets to play the game, and while Pokémon Go isn’t perfect, it is the first of its kind and serves as a large step forward.
The mobile game uses players’ real-time locations and creates an augmented reality, in which players can walk around and catch Pokémon, the creatures that the world of the game is based off of. Essentially, your character is placed onto a map that is designed to look like the world from the show, but is actually the layout of the city the player lives in.
Within the game, there are PokéStops, where players can replenish supplies, as well as Gyms, where players can battle the Pokémon of other players. These gyms are based in real locations, with various GameStop locations serving as Gyms as well.
The increased foot traffic that Pokémon Go has generated has driven the increased sales growth, highlighting just how much of an impact the game has. According to Raines, 462 GameStop stores served as Gyms this past weekend, a number that could continue to increase with time.
The boost is much needed for GameStop, which currently sits at a Zacks Rank #3 (Hold). Although Gamestop stock is up 2% year-to-date, analysts currently have 83% agreement in downward earnings estimate revisions for this quarter. Current estimates stand at $0.28 in earnings per share, down from $0.34 60 days ago.
GameStop’s outlook is fairly positive, with increasing earnings estimates of $0.28 per share and $4.01 per share for next quarter and this fiscal year respectively. Pokémon Go could serve as a catalyst for revenue growth, help that GameStop surely won’t mind receiving.
Investors should keep an eye out on Pokémon Go’s impact on GameStop moving forward, as some believe the game also has the potential to fizz out into irrelevancy soon, although current trends give reason to doubt that thesis. As is the case with anything on the market, time will tell.
Check out our very own David Bartosiak's guide to Pokemon Go for more information.
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