GameStop Profit Surges, Sales Miss, Stock Falls

Profitability improved due to aggressive cost cutting, with SG&A expenses reduced by 21% and operating income swinging to a $41.3 million profit from a $33.4 million loss a year ago, as reported by Business Wire. Gross margin expanded to 32.0% from 29.5%.

Hardware and software revenue declined double-digits, while collectibles surged 50% year-over-year to $256.1 million, becoming the primary growth engine, according to Benzinga. GameStop holds a substantial $8.8 billion in cash and marketable securities, including $519.4 million in digital assets (Bitcoin), acquired in May 2025.

Long-term debt increased to $4.16 billion, largely from convertible notes. Free cash flow reached approximately $107 million, representing a 13% margin, significantly up from 2-3% a year prior.

Wall Street maintains a "Reduce" consensus rating with an average price target of $13.50, implying substantial downside, as reported by MarketBeat. The company did not host an earnings call, leaving questions unanswered.