Gamestop (GME) seeing some bullish activity after it posted positive earnings. Gamestop video game retailer posted better than expected EPS, beating estimates by .02 cents a share. Gamestop is currently up $2.09 or 5.69% move today. GME is currently trading at $38.98 and has been trading in a fifty two week range between $30.94-57.74. Gamestops earnings call began to break down the various business segments and individual results. The beginning of the call focused on pre-owned physical game titles, digital game sales, and some metrics from next generation console sales. Gamestop is operating a brick and mortar business model in a highly cyclical entertainment environment. Although pre-owned sales margins increased, pre-owned sales are on the decline as the new cycle of game consoles are a hot ticket item. Last generation consoles pre-owned titles aren’t driving sales growth. Digital copy sales on the rise may be good for this quarters sales; however in the long run digital sales cannibalize Gamestops brick and mortar business model. Gamestop is also competing with other retailers such as Amazon (AMZN), Valve and the game console creators for digital sales. Gamestop may be posting positive results but competition will continue to get more intense. Gamestop is currently trading below the Ichimoku cloud with a bearish outlook into the future. In the near term options traders believe Gamestop will continue to move in a short term bullish trend. Today we saw a trade hit the tape with a trader buying 2000 (GME) Friday 5/30 $40 calls for $0.31. With the big move on earnings, traders are looking for a continuation of the recent Gamestop rally through next week.
