GameStop's (GME) Microsoft Deal Unlikely to Drive 'Meaningful' Upside - Wedbush
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Wedbush analyst Michael Pachter reiterated a Neutral rating and $8.00 price target on GameStop (NYSE: GME), saying while the Microsoft deal is positive it will unlikely drive "meaningful" upside.
"The stock reaction appears to be driven specifically by language that suggests GameStop will participate in the “lifetime revenue value of each gamer”, but the revenue share dynamic is likely less material than the share move would imply," the analyst commented.
He added, "For example, if a customer signs up for the $15 monthly Xbox Game Pass Ultimate at a GameStop store, we would expect GameStop to receive $1.50 or so from that monthly revenue stream for as long as the customer continues to subscribe. If instead, the customer signs up for Xbox All Access for $35/month, GameStop would share $3.50 per month for 24 months."
Shares of GameStop closed at $13.49 yesterday.
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