GameStop Gains Most in Year on Takeover Speculation (Update2)
March 11, 2010, 4:21 PM EST(Updates shares, options prices in second paragraph.)
By Jeff Kearns and Joseph Galante
March 11 (Bloomberg) -- GameStop Corp., the world’s largest video-game retailer, gained the most in almost a year in New York and trading of its bullish options jumped to a record on speculation that the company will be acquired.
GameStop advanced 5.9 percent to $19.35 at 4 p.m. New York time. Almost 63,000 options to purchase the shares changed hands, more than six times the four-week average. The most- active contracts were March $20 calls, which rose 140 percent to 60 cents. April $20 calls more than doubled to 95 cents.
“It’s trading higher today on takeover rumors,” said Charles Murias, head of sales trading at Auriga Securities SV in New York. “It’s cheap, they’re expanding stores and they’re taking prices lower than Wal-Mart and Best Buy, so maybe a bigger foreign player who wants a larger U.S. presence would be interested.”
The economic slump and free games on Facebook and MySpace from companies such as Zynga Game Network Inc. have hurt demand at video-game retailers. In January, sales of video games, consoles and accessories fell 13 percent to $1.17 billion, according to research firm NPD Group Inc. in Port Washington, New York.
Electronic Arts Inc., the second-largest video-game publisher, paid $400 million in November for online game company Playfish Inc. to expand beyond packaged games.
GameStop shares have dropped more than 20 percent in the past year. In January, it posted profit for the holiday quarter that missed analysts’ estimates and lowered its earnings forecast, citing “economic weakness” and shortages of products such as New Super Mario Bros. It is scheduled to report first- quarter results on March 18.
Chris Olivera, a spokesman for GameStop, declined to comment.
--Editors: Ville Heiskanen, Rob Golum
To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net; Jonathan Thaw at jthaw@bloomberg.net
