Shares surged 9.2% to $22.84 after GameStop delivered a quarter that would have been unthinkable two years ago: the highest quarterly net income in the company's history at $389.6 million , paired with a board-approved $2.0 billion share repurchase running through June 2029 . For a retailer once written off as a dying mall chain, the numbers demand a closer look at what's real — and what's still at risk.
A Profit Surge Driven Mostly by Cost Cuts and Investment Gains
Gross profit jumped to $340.3 million from $252.8 million, with the gross margin climbing to 40.7% from 34.5% . But the headline net income figure is inflated. Stripping out gains on digital assets, derivatives, and impairments, adjusted net income was $179.3 million — still impressive at more than double last year's $73.1 million, but less than half the GAAP number . SG&A expenses fell to $201.6 million from $228.1 million , continuing a multiyear cost-cutting campaign. The operational improvement is genuine; the headline is flattering.
Collectibles Now Outsell Video Game Hardware
Collectibles hit $348.9 million in net sales, accounting for 41.8% of total revenue — now larger than the hardware segment . That represents roughly a 65% year-over-year surge and marks a structural shift: GameStop is becoming more of a pop-culture merchandise company than a game store. Higher-margin collectibles explain much of the gross-profit expansion, but the durability of consumer spending on toys and memorabilia is cyclical and unproven at this scale.
A $2 Billion Buyback Signals Confidence — or Limits the eBay War Chest The buyback represents about 21% of the current ~$9.5 billion market cap, a meaningful signal that management believes shares are undervalued. GameStop sits on $9.7 billion in cash, securities, digital assets, and derivative collateral . Yet the company is simultaneously pursuing a $55.5 billion bid to acquire eBay , funded partly from its balance sheet and a $20 billion financing commitment from TD Securities . Buying back stock while chasing a deal six times its own size creates a tug-of-war over capital that shareholders need to watch carefully.
The Valuation Question Remains Open
At a trailing P/E of roughly 27.5 and a forward P/E near 19.4 , GameStop trades more like a growth company than a retailer. Short interest sits at 12.9% of shares outstanding , suggesting skeptics remain. Record profits and a massive buyback are real catalysts — but the gap between GAAP and adjusted earnings, the eBay wildcard, and collectibles cyclicality all argue against treating today's beat as a new baseline.