GameStop’s (GME) core business has seemingly been under pressure as video game sales have continued to move online — both through e-commerce sites selling titles and through downloadable content that requires no middleman merchant.
Furthermore, video gaming has moved into the mobile space with fewer console users and most gaming taking place on smartphones and tablets; Consider that recently, GME earnings slumped on a 30% decline in hardware sales.
So how could GameStop stock soar amid this environment? Well, simply, it has been poor expectations coupled with the fact that the next generation of the PlayStation from Sony (SNE) or Xbox from Microsoft (MSFT) will not include rumored features that would prevent used games from working in them.
Whether the gains stick — or whether bears increase their bet — is anyone’s guess.
GME is slated to report earnings on Aug. 22.