GameStop (GME) Stock: Profit Beat Can’t Save Shares as Revenue Falls Short

TLDR

• GameStop’s Q3 adjusted EPS hit $0.24, crushing the $0.20 estimate and quadrupling last year’s $0.06
• Sales dropped 4.6% to $821 million, falling short of the $987.3 million Wall Street expected
• Operating costs slashed from $282 million to $221.4 million year-over-year
• The company swung to $52.1 million adjusted operating income from a $24.6 million loss
• Bitcoin holdings stood at $519.4 million at quarter end

GameStop delivered a profit surprise in its third quarter but couldn’t escape a revenue shortfall. The video game retailer saw shares sink 4-5% in after-hours trading despite beating earnings forecasts.

The company posted adjusted earnings of $0.24 per share. Wall Street had penciled in $0.20. Last year’s third quarter brought just $0.06 per share. The earnings jump reflects serious cost management.

But revenue painted a different picture. GameStop pulled in $821 million for the quarter. Analysts wanted $987.3 million. That’s a miss of roughly $166 million, or about 17% below expectations.

GameStop Corp., GME

The sales decline hit 4.6% compared to last year’s third quarter. This follows a volatile year for the meme stock. Second quarter revenue jumped 22% year-over-year. First quarter sales fell 17%.

Cost Cutting Powers Profit Growth

GameStop’s expense discipline drove the earnings beat. Selling, general, and administrative costs totaled $221.4 million. That’s down from $282 million in the prior-year period. Management trimmed over $60 million in operating expenses.

Adjusted operating income reached $52.1 million. Last year’s third quarter posted a $24.6 million loss. The turnaround shows progress on the profitability front even as sales weaken.

The stock had been showing some life lately. Shares climbed more than 2.5% in December before the earnings report. Year-to-date performance remains down 26% though.

Investors focused on the revenue miss in after-hours trading. The gap between actual and expected sales raised concerns about demand trends. Physical retail continues facing pressure as gaming shifts digital.

Bitcoin Strategy Stays Course

GameStop’s cryptocurrency holdings remained stable through the quarter. Bitcoin assets were valued at $519.4 million at quarter end. This marked a slight decrease from Q2’s $528.6 million valuation.

The company hasn’t disclosed whether it bought or sold Bitcoin during Q3. The change in value likely reflects market price movements for the cryptocurrency.

GameStop began accumulating Bitcoin earlier in 2025 as part of its treasury strategy. The digital asset holdings now represent a substantial portion of the balance sheet.

The weak sales numbers overshadowed operational improvements. Cost cuts are working. Profit margins expanded. But the top line remains under pressure.

Wall Street’s reaction suggests investors want to see revenue growth return. Earnings beats only carry companies so far. Eventually, sales need to follow.

The video game retail landscape keeps evolving. Digital downloads dominate new game purchases. Streaming services offer alternative access to game libraries. Physical stores face an uphill battle.

GameStop’s restructuring continues showing results on the cost side. The company reduced operating expenses while maintaining profitability. However, the core retail business still struggles to generate growth.

Third-quarter results highlighted the tension in GameStop’s current position. Management can control costs but can’t force customers through the doors. The 4.6% revenue decline tells that story clearly.

Bitcoin holdings were valued at $519.4 million at the end of the third quarter, staying relatively flat from the previous quarter.

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