GameStop Corp. tumbled as much as 40% to a 16-year low after posting moribund sales and halting its dividend, signaling that the troubled retailer is out of step with accelerating trends in video games.

The latest shortfall for GameStop reflects what analysts said may be a fundamental disconnect between the company’s business model, mainly focused on sales of physical game discs at brick-and-mortar stores, and the industry’s move toward online and streaming games like the free-to-play Fortnite.

Comparable sales — a closely watched measure of performance — fell 10.3% last quarter, GameStop said late Tuesday. Analysts had estimated a 6.4% decrease, according to Consensus Metrix. Halting the 38-cent quarterly dividend will save about $157 million annually, the company said.

GameStop’s share decline Wednesday was its steepest since its February 2002 initial public offering, with the stock falling to as little as $4.71 in New York trading. That’s its lowest point since February 2003. The retailer has lost about 95% of its market value since its peak of more than $10 billion at the end of 2007, and is now worth less than $500 million.

The Grapevine, Texas-based company “faces the need for a dramatic pivot, wholesale changes, and aggressive action to remain relevant,” Jefferies analyst Stephanie Wissink said in a note Wednesday.

Though GameStop’s adjusted earnings were better than expected, the plunge in sales suggests the company can’t pull out of its decline. Sales of gaming hardware fell 35% — hurt by slipping demand for the Xbox One and PlayStation 4 — while software revenue dropped 4.3%.

GameStop is embarking on a cost-cutting drive under a new chief executive officer, but investors are pessimistic that its core business can get back on track. Even before the declines late Tuesday and early Wednesday, the shares were down 38% this year.

“The combination of the transformation initiatives, ongoing consumer shift to digital gaming, and current console cycle being in the very late stages are likely to make 2019 a very challenging year,” Telsey Advisory Group analyst Joseph Feldman said in a note.

Earlier this year, Apple Inc. and Google each announced they were launching online services for games. And established game companies such as Activision Blizzard Inc. are moving more of their titles to an online, free-to-play model.

GameStop also said it will cut costs at its ThinkGeek collectibles business by consolidating the online operation with the main company website.

George Sherman, a retail veteran who took over as CEO in April, named four senior managers to be part of his turnaround team, including a new chief financial officer and chief merchandising officer. Sherman said he wants declutter the stores and focus on the top-selling products. He’s also looking for ways to increase the company’s digital business and host more events in stores.

“We owe it to our team to develop a better strategy and a better product for our customer,” he said on a conference call Tuesday. “We have hard work in front of us, we’re up to the challenge.”

Bloomberg’s Ryan Vlastelica contributed to this article.