Three Major Names That Won't Exist in 2020
Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Depending on how quickly your years fly by, we’re either just a little away from 2020, or we still have far to go. No matter what happens between now and then, though, there will be some companies that thrive, and some that falter. I have come up with three companies that clearly show no sign of making it to 2020 in their current state. While these companies will likely produce some harsh feedback amongst the blogging community, I stand by the fact that all three of these companies will not survive (by themselves) through 2020.
So, just which companies am I speaking of? Well I have on my list GameStop (NYSE: GME), Groupon (NASDAQ: GRPN) and Research In Motion (NASDAQ: BBRY). All three of these companies have something wrong with them, something that will break them in the end.
GameStop is in the business of video game retail sales. I can tell you that both Sony and Microsoft will be making a push towards digital sales in their next consoles in order to curb used game sales. GameStop will not survive without their used games sales business. This company will be eaten up pretty quickly unless they find a way to innovate and come back to market with some new products. GameStop time of death: 2017.
Groupon is a weird one; they have plenty of sales, but they’re still losing over a million dollars every single day. The problem comes in when retailers don’t see the benefits that Groupon have promised. Retailers all around are expecting traction after the sales, but a majority of them are seeing customers just drop right off. That’s because a lot of the consumers on Groupon see the bargain and buy it that one time, with no plans to go back. To defeat this, Groupon may have to come up with better pricing for retailers or even be acquired. This company as it stands will not last out the decade. Groupon time of death: 2016 or acquired prior to then.
Research In Motion is a fun one right now. I wrote an article about them some time back and was bashed for even calling this company bad. It is most definitely a horrible company with horrible prospects, and I’m not afraid to say it. Research In Motion will be acquired for their patents, and that is all. This company will not make another great phone, and they won’t go making billions in profit per year. They’ll continue to squander money, and eventually bankruptcy will be declared. Research In Motion time of death: 2014.
GameStop has a market cap of $3.1 billion and a P/E ratio of -8.85. That P/E ratio came out to be because of some write-downs in the October quarter. Aside from that, this company is making money. It won’t continue though. I think that this Christmas season will likely be the last good one for the company. Games will become easier to access and download, and there likely won’t be too much of a need to stop by a local Gamestop. The lack of debt will keep them going for a while, but over time it will become more and more apparent that it is time to close up shop. The standalones will go first, leaving just the mall GameStops to a long, drawn-out death.
Groupon is right around the $4 billion market cap range. They’ll probably be the only company of the three to be acquired outright by someone else eventually. Net income per employee at the company is -$3,377, and that’s on revenue per employee of $190,771. Clearly they will have to get spending under control to even hold a fighting chance over the long term. If this company is not acquired by 2015/2016 and they haven’t done anything major to actually make a profit, then they will be going the way of the dodo.
It astounds me that Research In Motion is still operating today. This company will not last another two years, guaranteed. No one is buying their phones, and no one ever will unless they come away from their proprietary software and start implementing Android on their devices. I may have been a bit harsh earlier to say they’d go bankrupt, but I do think that the managers will eventually think it’s time to call it quits and begin selling off the assets. RIM has a market cap of $7.3 billion at the time of writing and will likely continue its steady decline from there.
Probably best not to short these stocks, unless you’re doing it over the long term: Volatility within them takes a good hold. I’d definitely recommend taking your money and running far away if you own these companies though. Or, a better option would be to request paper copies of your shares for use as a fire-starter--that’s all they’ll be worth in the winter of 2020.
Ash1402 has no position in any stocks mentioned. The Motley Fool owns shares of GameStop. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!