CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

GameStop software glitch: GME stock price may see more turbulence as video game retailer struggles to fulfil pre-orders

By Indrabati Lahiri

08:45, 4 October 2022

A view of a GameStop store in Levittown, New York
GameStop has been facing issues with pre-orders lately, driving the stock lower – Photo: Getty

GameStop (GME) the world’s largest video game retailer, may be finding itself in hot water again as the chain faces issues honouring pre-orders, due to a software glitch.

The so-called meme stock, which has seen astonishing share price activity in the past couple of years, has in recent days been quite subdued, dropping more than 47% since the four-month highs seen at the beginning of August.

This latest software glitch may mean that GameStop's woes are far from over. The shares, however, gained 1% to $25.38 on Monday and were up 2.5% in pre-market trade on Tuesday.

What is your sentiment on GME?

25.57
Bullish
or
Bearish
Vote to see Traders sentiment!

GameStop (GME) share price chart

Why is GameStop (GME) struggling with pre-orders?

Pre-orders account for a huge chunk of GameStop’s revenue. However, the company is facing a software glitch, which is preventing staff from entering pre-orders, or sometimes wiping the entire history of pre-orders.

Inventory searches have also been affected and often, copies of the items ordered turn up late or fail to arrive at all. This is leading to a slew of disgruntled customers, who are likely heading to other websites such as Amazon (AMZN) or Best Buy (BBY).

The software issues have been due to an SAP software switch which was launched in the summer and was intended to bring several databases together.

Why has GameStop (GME) dropped so much in the last couple of months?

GameStop has benefited somewhat from the rally in meme stocks, that is, stocks that gain retail investor popularity through internet memes, usually circulated on social media. However, it is still struggling with the last six quarters facing losses, as demonstrated by its latest earnings report on 7 September.

AMD

180.68 Price
-0.310% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.28

NVDA

127.58 Price
+0.720% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.12

GME

25.57 Price
+0.080% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.15

AAPL

228.28 Price
+0.230% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.16

This is mostly due to consumers spending less on discretionary items, as inflation persists at multi-year highs, with essential expenses such as rent and mortgage on the rise as well. GameStop also saw a 4 for 1 stock split at the end of July this year, which saw the stock surge a little, but proved short-lived.

Furthermore, GameStop (GME) is also having to compete with Amazon and Best Buy which are also popular websites for video games. The company has also recently partnered with a cryptocurrency exchange known as FTX, but this may have come at the wrong time, as NFTs and cryptocurrencies are currently seeing a decline.

What is the outlook for GameStop (GME)?

According to CNN Business, GameStop (GME)’s 12-month forecast is around $16, with a high estimate of about $26 and a low estimate of about $6. The stock has also received a “hold” rating.

Broker analysis published by Marketbeat provides a consensus rating of 'reduce' and an average target price of $22. 

However, investors are also keeping a close eye on the performance of cryptocurrencies and NFTs, in order to see whether the FTX partnership turns out to be a success, or a misguided move in the coming months.

 

Markets in this article

AMZN
Amazon.com Inc (Extended Hours)
195.55 USD
0.46 +0.240%
BBY
Best Buy
86.09 USD
0.51 +0.600%
GME
GameStop Corp (Extended Hours)
25.57 USD
0.02 +0.080%

Related topics

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 630,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading