Shares rose more than 40% on Thursday after the videogame retailer announced an agreement to standardize its business
Cloud-based enterprise software applications. Just because it is such a big win for the stock is a bit surprising.
GameStop (ticker: GME) will run its back-end and in-store systems on Dynamics 365, Microsoft’s cloud-based business applications and customer-data platforms. The company said the system would give store associates the ability to access data about “customer preferences and real-time information about purchasing history, product availability, membership, pricing and promotions”.
GameStop also said it would roll out more than 30,000 store associates to Microsoft 365 and Microsoft teams.
The company said it has expanded its Xbox product offerings to include Xbox All Access, which provides players with Xbox consoles and a 24-month Xbox Game Pass Ultimate at no upfront cost. According to the announcement, both GameStop and Microsoft “will benefit from the customer acquisition and lifetime revenue value of each gamer brought to the Xbox ecosystem,” although specific terms were not announced.
The deal comes a few weeks before the November 10 launch of the Xbox series. Microsoft (MSFT) is the latest version of the game console.
It’s not entirely clear why the standardization stock on Microsoft’s cloud application should be so dramatically higher, but the company has clearly telegraphed that this is a big deal. The stock was slightly restrained for news prior to the announcement.
When asked about the announcement and a sharp rally, Wesbush analyst Michael Pachter said, “The market reaction is potentially a small squeeze … with little potential for a large revenue stream from GameStop.”
GameStop shares closed at $ 13.49, up 44%, and continued to rise in subsequent trading,
Write Eric J. at [email protected] Savitz