GameStop Reports $45M Profit in Q1, Marking a Major Turnaround and Bitcoin Investment

GameStop Corporation is set to report its Q2 financial results, with a focus on the company's growth in collectibles and improving profitability. The company has reported an increase in second-quarter revenue and a significant rise in its cash position to nearly $9 billion. GameStop has improved its profitability, posting adjusted earnings per share profits in five of the last six quarters after a period of losses. The Collectibles revenue grew to $211.5 million in the first quarter, the only sector showing year-over-year growth, helping to offset declines in video game hardware, accessories, and software. Analysts expect revenue of $823.25 million, an increase from $798.30 million in the same period last year. Wedbush Securities analyst Michael Pachter maintains an Underperform rating with a $13.50 price target, noting that most of the valuation ($12.50 per share) comes from cash, securities, and cryptocurrency. CEO Ryan Cohen clarified that GameStop will not become a Bitcoin treasury company but may buy Bitcoin as an inflation hedge.

GameStop, the Texas-based video game retailer, reported mixed financial results for the first quarter of 2025. The company announced earnings per share (EPS) of $0.09, surpassing the analyst consensus expectation of $0.04. However, revenue for the quarter fell short, coming in at $732.4 million compared to the Wall Street estimate of $754.2 million. This represents a decline in revenue, attributed to shifting consumer demand toward online gaming. Despite the revenue shortfall, GameStop highlighted an improved operating margin of 1.5%, up from -5.7% in the same quarter of 2024. Additionally, the company reported free cash flow of $189.6 million, a significant improvement from the negative $114.7 million recorded a year earlier.

In a notable move, GameStop disclosed that it had purchased 4,710 Bitcoins (BTC) between May 3 and June 10, 2025, as part of its strategy to invest in risk assets like cryptocurrencies and stocks. The current value of these Bitcoin holdings is approximately $516.6 million, based on the prevailing market price. This aligns with GameStop's earlier announcement about adopting a cryptocurrency investment strategy similar to that of MicroStrategy (MSTR).

The company's stock (GME) experienced a decline of about 5% following the earnings release, reflecting investor concerns over the revenue miss. Over the past 12 weeks, however, GameStop's share price has risen by 33%, indicating some resilience despite the quarterly challenges. Currently, only one Wall Street analyst provides a rating and price target for GME stock, leaving the broader market sentiment somewhat uncertain.

GameStop's financial performance and Bitcoin investment underscore its efforts to pivot toward new revenue streams while navigating the evolving gaming landscape. The company's focus on leveraging excess cash for high-risk investments reflects a broader trend among firms seeking alternative growth avenues.

GameStop, the video game and entertainment software retailer, has reported a significant financial turnaround in its first-quarter earnings for the fiscal year. The company transformed a $32 million loss into a $45 million profit, showcasing a remarkable recovery. Additionally, GameStop announced an investment in Bitcoin, signaling a strategic move into digital assets. The company also highlighted a 54% increase in sales of collectibles, underscoring its diversification efforts beyond traditional video game retail.

The financial results were presented in accordance with U.S. generally accepted accounting principles (GAAP), but GameStop also used non-GAAP measures such as adjusted SGA expenses, adjusted operating income (loss), adjusted net income (loss), adjusted earnings (loss) per share, adjusted EBITDA, and free cash flow. These measures were employed to provide investors with a clearer view of the company's core operating performance.

Despite the positive earnings, GameStop's stock experienced a decline due to weaker-than-expected Q1 revenue. The company attributed this to various factors, including economic, social, and political conditions in its operating markets, the competitive nature of the video game industry, and the cyclicality of the sector. Other challenges include dependence on timely product deliveries from vendors, technological advancements impacting consumer behavior, and supply chain disruptions.

GameStop emphasized its efforts to manage profitability and cost reduction initiatives, maintain strong retail and e-commerce experiences, and adapt to changing industry trends and consumer preferences. The company also acknowledged risks such as potential damage to its reputation, data security concerns, and compliance with evolving data privacy laws. The announcement of the Bitcoin investment reflects GameStop's broader strategy to explore new revenue streams and capitalize on digital asset trends.