Pokemon Go is one of the most popular apps across the world right now and GameStop (GME) is one company that should see the trendy app boost the company's bottom line this quarter.
WedBush analyst Michael Pachter believes GameStop will deliver an upside to comparables guidance (currently expected to be about negative 4%) by 65 to 200 basis points. That upside potential is largely dependent on the continuation of the shocking sales trend seen right after the release of Pokemon Go in the U.S.
GameStop CEO J. Paul Rainer said on CNBC last week that for the weekend following the opening of Pokemon Go in the U.S., sales were up 100% in the stores that simultaneously acted as Poke Stops or Pokemon Gyms. Raines also said the company saw 100% growth in GameStop's Pokemon collectibles.
"[Customers] are more likely to buy something if they wonder in to catch a Pokemon," said Pachter in a phone interview with Real Money Monday. TheStreet's Brian Sozzi found Pokemon backpacks in a window display at a location in Garden City, New York.
Considering Rainer's comments, Pachter said, "One-thirteenth of the quarter was worth an extra week at 10% of its stores." He added that if you get one-thirteenth at 10% of stores for about 65 bps for the week, for the whole month it could be 200 bps, but the analyst said the range will more likely be between 65 and 100 bps.
Pachter also believes that GameStop did not pay Pokemon's parent company to have its stores be used as gyms and stops -- making the company a "beneficiary" of the popular app, as the analyst noted that typically Pokemon gyms are public places, like schools and parks.
Calls to GameStop were not immediately returned.
But Pachter said that GameStop has no claim to being a Poke Stop forever, meaning those sales from increased traffic could change in the future.
In a research note Thursday, Wedbush analysts, including Pachter, said they "do not believe that the compulsion loop in the game is strong enough to keep most gamers engaged for more than a few months."
Furthermore, Jefferies analyst Atul Goyal said in a research note Monday that Nintendo (NTDOY) will get 40% to 50% of the net profits from the in-app business of Pokemon Go (The Pokemon Company is co-owned by Nintendo, Game Freak and Creatures Inc.). Goyal added that "given the affiliate nature of the investment, this profit will not flow through top-line, OP." Nintendo stock plummeted more than 8% during the trading session Monday on higher than average volume.
So GameStop better catch all the sales they can now as the uncertainty surrounds future gamer engagement. Prior to the end of the quarter, the company is hosting an August 1 Pokemon event "to delight our customers" -- and possibly investors.