GameStop Stock Drops After Sony Patent News
After opening the day at $25.44 per share, GameStop’s stock dipped as low as $24.36 yesterday after word of Sony patenting technology that may harm the secondhand game market by blocking access to previously owned games. At the time of this writing, GameStop’s stock has risen to $24.71.
In response, gaming industry analyst Michael Pachter of Wedbush Securities sent a note to investors expressing his belief that Sony’s patent will not significantly impact the used game market. He wrote:
“Sony benefits little from a unilateral decision to block games. The company’s first party software sales represent less than 10 percent of overall sales on its consoles, and it is unlikely that blocking used games would result in a lift of more than 10 percent in new game sales. That means that Sony’s sales would rise only marginally if the PS4 blocked used games.”
Pachter went on to say that “Sony would be materially hurt if its console blocked used games and competitor consoles from Microsoft and Nintendo did not,” and set a 12-month share price target of $33 for GameStop. He, as well as four other analysts, including Arvind Bhatia of Sterne Agee, considers the reaction to the patent news to be “overblown.”