Here's how GameStop went from dying retail relic to a 'meme stock' that has rattled the American stock market (2024)

2021-01-31T12:00:00Z

Here's how GameStop went from dying retail relic to a 'meme stock' that has rattled the American stock market (1)

GameStop may be the largest video-game retailer, but it's a dying one, and it's been that way for years.
The COVID-19 pandemic shot a much-needed jolt of life into GameStop as people sought at-home entertainment.
An online forum sent GameStop's stock price through the roof, shaking up the US financial system in the process.
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Two years ago, GameStop was quickly deteriorating, ready to become a mere relic of the video game retail era.

The gaming retailer, the largest in the industry, began to flail within the past decade as game developers turned toward creating digital versions of their games. Customers went from camping outside stores to be the first to snag the new version of "Call of Duty" to downloading or streaming it online from their homes.

Here's how GameStop was merely a dying brand two years ago, found a temporary safety net during the pandemic in 2020, and has evolved into a full-blown "meme stock" that has sent earthquakes through the traditional American financial system.

GameStop was at one point the go-to place to get your hands on the hottest new video games of the season.

Here's how GameStop went from dying retail relic to a 'meme stock' that has rattled the American stock market (3)

But like other brands that sold physical entertainment (remember Blockbuster?) GameStop started to see a drop in foot traffic and in sales.

In September 2019, GameStop CFO Jim Bell announced the company was "on track to close between 180 and 200 underperforming stores globally by the end of this fiscal year."

GameStop closed 462 more stores in 2020.

The video game industry at large was evolving to cater to new consumer demands, and gamers began to stream or download games online from their homes.

Here's how GameStop went from dying retail relic to a 'meme stock' that has rattled the American stock market (4)

GameStop was slow to catch up with the times, and it suffered.

In June 2018, GameStop announced that it was in "exploratory discussions" with potential buyers. Its share price slumped to around $4 and floated there for years.

Insider visited GameStop locations in New York City and in San Francisco in mid-2019 and saw how the company was unable to or unwilling to evolve.

The company posted dismal quarterly earnings in mid-2019 and also eliminated its quarterly cash dividend, meaning it couldn't afford to pay shareholders what they were owed.

Things were looking bleak for GameStop — until the COVID-19 pandemic emerged in March 2020.

Here's how GameStop went from dying retail relic to a 'meme stock' that has rattled the American stock market (5)

Suddenly, people were cut off from going to the office, the movies, concerts, restaurants, and other leisure activities.

And GameStop, long a straggler to the digital awakening of the video game world, saw a slight boost. its online sales surged over 1,500% between March 1 and April 10, 2020, according to a March report from Earnest Research in The New York Times. The spike coincided with the releasse of Nintendo's uber-popular "Animal Crossing: New Horizons," and the game and its console were available in stores, not on smartphones.

In July 2020, GameStop CEO George Sherman told Dallas Innovates that the company's e-commerce sales spiked 519% in the first three months of 2020. Sherman also said GameStop leaned heavily on its feature that allowed customers to buy online and pick up curbside at physical retail locations.