GameStop shares are getting whacked after earnings miss expectations

Gamestop

(Flickr/Steve Wright Jr. )

GameStop is tanking after its earnings release on Thursday.

The stock fell by as much as 6% in after-hours trading.

Shares closed around 2.5% lower at $38.79 per share in regular trade on Thursday; shares are up by over 15% year-to-date.

In the fourth quarter of 2014, total global sales fell 5.6% — or 2.8% in constant-currency terms — to $3.48 billion, versus $3.68 billion in the prior year. Expectations were for sales to total $3.6 billion.

Adjusted earnings per share came in at $2.15 per share, missing expectations for earnings of $2.16.

"2014 was a year of continued growth, diversification and expansion of the GameStop family of specialty retail brands," said CEO Paul Raines in a statement. "In our core video game business, we achieved our highest market share in history with 28% share of next-generation hardware, 46% share of next-generation software and an estimated 42% share of downloadable content."

The company said a decrease in new hardware sales offset gains in mobile and consumer electronics.

Ahead of the earnings report, BMO Capital Markets analysts wrote: "The rapid rise of digital distribution of software, especially full-game downloads, we believe remains a significant headwind for the company as the increasing share of full-game downloads removes those units from potentially participating in the company’s pre-owned eco system."

Last month, GameStop won the rights for over 160 stores that RadioShack planned to close after it went bankrupt, Bloomberg reported.

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