Gamestop shares surge after company swings to profit

GameStop shares rose 5% on Wednesday after the company posted results that exceeded Wall Street expectations for the second quarter.

The video game retailer reported earnings of 25 cents per share, well above analysts’ consensus estimate of 16 cents.

Revenue climbed to $972.2 million from $798.3 million in the prior-year period, topping the average forecast of $823.3 million.

The company swung to an operating profit of $66.4 million, compared with a loss of $22 million in the same quarter last year.

GameStop also managed to reduce its selling, general, and administrative expenses, which fell to $218.8 million from $270.8 million a year earlier.

Net income surged to $168.6 million from $14.8 million in the comparable quarter last year.

On an adjusted basis, excluding one-off items, net income reached $138.3 million, up from just $5.2 million a year earlier.

Hardware and collectibles deliver momentum

GameStop’s turnaround was fueled by strong performance in its hardware and collectibles divisions.

Collectibles sales jumped 63% year over year, underscoring the company’s efforts to diversify revenue streams beyond traditional game sales.

Hardware and accessories revenue also delivered robust growth, rising 31% to $592.1 million.

The increase was supported by demand tied to Nintendo’s Switch 2 launch, as well as a healthy pipeline of new game releases that bolstered interest in existing consoles such as Sony’s PlayStation 5 and Microsoft’s Xbox Series X/S.

The company has also leaned on partnerships with publishers to offer exclusive merchandise, including collector’s editions of popular titles such as Borderlands 4.

These initiatives aim to draw consumers to both physical retail stores and GameStop’s expanding digital channels.

While the retailer was once a dominant force in brick-and-mortar gaming sales, competition from e-commerce platforms, particularly Amazon, has eroded market share in recent years.

GameStop’s strategic pivot toward digital offerings and exclusive content is intended to regain traction with consumers in a shifting marketplace.

Strengthened balance sheet and Bitcoin holdings

The company ended the quarter with $8.7 billion in cash, cash equivalents, and marketable securities, a sharp increase from $4.2 billion in the year-earlier period.

This stronger balance sheet provides GameStop with flexibility as it continues to navigate the evolving gaming landscape.

In addition to its cash reserves, the retailer reported bitcoin holdings valued at $528.6 million at quarter-end.

The cryptocurrency position adds another layer to the company’s asset base, though it also exposes the balance sheet to digital asset volatility.

GameStop’s ability to deliver profitability and outpace expectations marks a significant reversal from its struggles in recent years.

With continued growth in hardware and collectibles, coupled with expanding digital strategies, the company appears positioned to leverage both consumer demand for gaming products and its strengthened financial footing.

Whether it can sustain momentum in the face of industry competition, however, remains an open question for investors.

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