In an official announcement made today, the GameStop board of directors announced that it has terminated efforts to sell the company. The beleaguered games retailer had been looking to find a buyer since last May, but today's announcement reveals these efforts were met without success. Investors have reacted quickly to the official statement, with the resulting drop in GameStop stock value hitting the company for almost half a billion dollars.
The company's stock value has seen a drastic plummet of up to 28% following the announcement, which represents a loss of about $430 million. This marks a 52-week low for the troubled retailer, which now finds its stock resting at around $11.24 as investors react to the official statement.
A large factor in the decline of the company is the rise of digital media, with each year showing an increasing number of consumers who prefer to skip physical purchases altogether. A similar transition has heavily impacted the likes of the newspaper industry, and that means things aren't looking good for GameStop - though the dust hasn't settled on the dramatic stock drop yet.
GameStop stated that the cessation of its buyout strategy was due to the "lack of available financing on terms that would be commercially acceptable to a prospective acquirer." There were rumors that two firms were bidding to complete a buyout as soon as next month, but these deals evidently never came to fruition.
Earlier this month, the company concluded the sale of its Spring Mobile business, a process which generated $735 million for the company. More than half the value of this sale was just eaten up in stock losses today, but the board promises that it's still looking to find an optimal use for the proceeds. The sale was a much-needed cash injection for GameStop, which recorded lower holiday sales in 2018 than it did the year prior.
GameStop is currently without a permanent CEO, a factor which is likely fueling the rate at which investors are shying away from the embattled retailer. It'll be interesting to see if the stock recovers later on this week, but today will certainly go down as one of the worst days yet for the beleaguered business.