GameStop collapsed by 7% in the afterhours trading session, as I had alluded to earlier in the trading day, this had the makings of an awful earnings report, especially in terms of outlook. GameStop provided a guidance range of $0.58 to $0.63 for Q1’16 which fell below consensus a $0.70. The company also reported that revenue would decline by 4%-7% in the upcoming quarter, which is again below consensus. Source: Game Stop The company reports that sales will remain flat, and same store comps could be slightly negative this year. Of course, this is a pretty rosy projection on revenue, but is roughly in-line with what Wedbush had estimated earlier in the week. The EPS figure that Wedbush predicted for FY’16 outlook was $4.16, which GameStop fell below at $3.90 to $4.05. So, GameStop remains a speculative trading vehicle at best. I think the stock will exhibit further declines as we progress through the year, as console game title launches are a little weak when compared to the prior year. Battlefield 5 could be a needle mover, but shooter titles have shifted to online channels over the past couple years, so the incremental impact on Game Stop could be less meaningful. Game Stop thinks that it’s digital channels will plug the holes in the upcoming year. Color me somewhat skeptical, but here’s what was mentioned in the earnings conference call:We are pleased that we have managed the transition of ramping up Digital and Collectibles inside our GameStop branded stores, while allowing for declines in physical software. In 2015, nearly 25% of operating earnings came from non-physical gaming sources like Digital, Collectibles and Technology brands. Let me say that again, in 2015, nearly 25% of operating earnings came from non-physical gaming sources like Digital, Collectibles and Technology brands. This planned mix shift allows us to show the impressive results we have on profit contribution for this year and into the future. And, our goal is to increase the contribution from Digital, Collectibles, and Technology brands to 50% by the end of 2019. I think Game Stop’s online channels are relatively weak when compared to Xbox Live and PSN, but needless to say, the efforts to sell via online have mitigated some of the weakness in store traffic. Given enough time, Game Stop will need to shutter some of its retail foot print. In other words, management seems somewhat overly optimistic on its revenue outlook, and efforts to appease shareholders will be driven by store count reductions. In other words, no one is buying the story as evidenced by the decline in the stock following its earnings report. At this point, traders or investors can continue to ride the momentum down until a more significant earnings catalyst materializes.