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Will GameStop's Wild Ride In The Stock Market Actually Help Its Business?

AILSA CHANG, HOST:

GameStop is returning from the stratosphere. Shares of the video game retailer dropped today, but they are still worth more than $90, compared to $4 a year ago. An outpouring of love from individual investors on Reddit has changed very little at the company itself. It's still in dire need of its own turbocharge, as NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: While GameStop shares soared among the stars, back on Earth, things were much more ordinary.

Classic location.

I went on a cold pandemic day to a strip mall in Virginia, where a GameStop sits next to a GNC and a vape shop. Outside, the video game store promotes trade-ins of used games and devices.

Cash for phones.

Inside, it's pretty empty; two walls lined with gear to transport yourself to fantasy, like headsets and controllers. In the middle, stuff to bring you back to reality.

So many T-shirts and hats and socks.

This is today's GameStop, a store in a strip mall hoping someone comes for a $60 game or a $20 action figure.

REBEKAH VALENTINE: It has kind of diluted them as a destination specifically to buy games.

SELYUKH: Rebekah Valentine reports on the games business and has spent years following GameStop's stalling efforts to reinvent itself. Video gaming is booming as an industry, especially in a pandemic. More people are ordering physical games online, and even more people are simply downloading them. GameStop's online presence has not kept up pace with either. Meanwhile, it has about 5,000 store locations, and that's after shuttering hundreds, trying to slim down.

VALENTINE: I keep waiting for whatever this big turnaround that they say is going to happen to happen. And it still hasn't.

SELYUKH: For years, used games were GameStop's cash cow. These days, gamers joke about how little the store pays for old games, and that business has declined. A few years ago, GameStop got into selling collectibles, which have done OK. It sold some office space and its corporate jet and paid off some debt. It even tried to sell itself unsuccessfully. Early last year, GameStop emerged with a groundbreaking plan - concept stores piloted in Oklahoma.

VALENTINE: They had, like, a retro-themed store with, like, all these retro games you could play. Or you could sign up for time, kind of like a gaming cafe or something. And you could, like, do birthday parties there. I went there on, like, a community game night. There was, like, a Fortnite tournament, and all these kids were playing, and their parents were there socializing. It was genuinely really neat.

SELYUKH: But the timing was poor, right before the pandemic made gatherings unsafe. This left GameStop banking on a pivotal moment last holiday season, the release of new PlayStation and Xbox consoles. GameStop reported a huge spike in online sales, but total sales at stores still declined.

JOE FELDMAN: They've been in decline for five years.

SELYUKH: Joe Feldman is a senior equity analyst at Telsey Advisory Group. Many investors are now watching whether GameStop's new board members push for a new turnaround plan. They include Ryan Cohen, co-founder of pet retailer Chewy, who has campaigned to get GameStop into esports and streaming and mobile. But that's an uncertain future juxtaposed against a harsh reality.

FELDMAN: In 2020, they're going to reported a loss year. They're going to lose money in this year.

SELYUKH: Which is why GameStop's current high share price is so mind-boggling to experts like him because it's disconnected from GameStop's actual business, where, at least for now, not much has changed.

Alina Selyukh, NPR News.

(SOUNDBITE OF LULLABY'S "DAWN") Transcript provided by NPR, Copyright NPR.