Shares of GameStop Corp. GME, +44.12% gained 44% in Thursday trading after the company announced that it has entered into a multi-year partnership with Microsoft Corp. MSFT, +0.35%. Through the partnership, GameStop will use Microsoft’s Dynamics 365 portfolio of cloud applications to help run its back-end and in-store operations. GameStop plans to use Dynamics to gain insights into customer preferences.
GameStop employees will also use Microsoft Surface tablets while working with customers, and GameStop will use Microsoft Teams for workplace communications. The company said in a release that it’s adding Xbox All Access to its offerings, “which provides an Xbox console and 24 months of Xbox Game Pass Ultimate to players with no upfront cost.” The company expects both it and Microsoft to benefit from “the customer acquisition and lifetime revenue value of each gamer brought into the Xbox ecosystem.” Jefferies analyst Stephanie Wissink wrote that this Xbox arrangement is the most constructive to her bullish view on GameStop as it “at least partially remov[es] a headline risk that GameStop loses all value from software sales as they shift from physical to digital.” She assumes that the company sees weaker economics for digital software versus physical sales “but some economics are better than none.” Wissink has a buy rating and $10 price target on the stock. The stock has risen 217% over the past three months as the S&P 500 SPX, +0.80% has gained 9%.