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GameStop stock drops after analyst downgrade

"Disappointing" sales spell trouble for US retailer as predictions fall short

GameStop has seen its stock price drop by as much as 8.9 per cent, after analysts downgraded the US retailer's stock rating from "buy" to "neutral".

Janney Montgomery Scott analyst Tony Wible categorised GameStop's 5.2 per cent rise in software sales last month as "disappointing". According to an Associated Press report he had predicted a 13 per cent rise during September. Total sales, including hardware and peripherals, rose by just 1 per cent on the same period last year.

Although the US retailer's results are not exceptional compared to other retailers and publishers, the change in rating was enough to see a sharp drop in the company's share price to $25.65.

Rather than the meaningful growth hoped for, Wible saw the company's results, and the recent NPD data for September, as evidence of continued weakness in the market. Wible now projects a 4 per cent drop in GameSpot's third quarter sales - compared to a previously predicted 3.1 per cent rise.

Wible believes that GameStop will now have to rely more on second-hand sales over the Christmas period, thanks to a smaller than usual line-up of big name releases.

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