GameStop Slips Below Book Value as Outlook for Retailer Worsens

(Bloomberg) -- Investors are wondering whether it’s game over for GameStop Corp.

For the first time since the electronic and game-store operator began reporting goodwill data in 2001, the company is worth less than book value. GameStop has fallen the way of other brick-and-mortar retailers, with declining foot-traffic and an uptick in online gaming weighing on profits. 

The retailer’s market capitalization has fallen below its goodwill -- a self-reported measure which calculates the fair market value using intangible assets, like its reputation --indicating that investors think the company is worth less than the measure suggests.

The Grapevine, Texas-based company’s market capitalization has shrunk in recent years as its stock tumbled nearly 75 percent from its peak at the end of 2007. Its market value is currently about $1.6 billion, while its goodwill value sits at roughly $1.7 billion. It has now joined the ranks of only two other companies in the S&P 500 Index, CenturyLink Inc. and Envision Healthcare Corp., that currently trade below goodwill.

GameStop said in its December 2017 sales statement that it expects to record non-cash impairment charges of $350 million to $400 million to goodwill in the fourth quarter. The company is expected to report quarterly results on March 22.

--With assistance from Marina Girgis

To contact the reporter on this story: Kailey Leinz in New York at kleinz1@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Andrew Dunn

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