GameStop Corp (GME) Stock: Mixed Earnings Results as Company Builds Bitcoin Position

TLDR

Table of Contents

GameStop reported Q1 EPS of $0.09-$0.17 beating analyst expectations, but revenue of $732.4 million missed the $754.2 million consensus
The company purchased 4,710 Bitcoin between May 3 and June 10, worth approximately $516.6 million at current prices
Operating margin improved to -1.5% from -5.7% in the same quarter last year
Free cash flow turned positive at $189.6 million compared to negative $114.7 million a year earlier
Wall Street analysts maintain a “Sell” rating with a $13.50 price target, representing 55% downside from current levels

GameStop shares dropped roughly 5% following the video game retailer’s first-quarter earnings report. The company delivered a mixed bag of results that both impressed and disappointed Wall Street.

The Texas-based retailer posted earnings per share of $0.09 to $0.17, depending on the accounting method used. This beat analyst expectations of $0.04 per share by a comfortable margin.

However, revenue told a different story. GameStop brought in $732.4 million for the quarter, falling short of the $754.2 million consensus estimate by about $21.8 million.

🚨 GameStop $GME Q1 Earnings:
🟢 EPS: $0.17 vs $0.04 est
🔴 REV: $732.40M vs $754.24M
📉 The stock price closed down 6% from yesterday's highs
🔹Revenue droped 17% to $732M as gamers shift to digital downloads. Despite cutting costs and turning a profit, store closures… pic.twitter.com/ybhMnA203r
— Trader Edge (@Pro_Trader_Edge) June 11, 2025

The company showed some operational improvements during the quarter. Operating margin improved to -1.5% from -5.7% in the same period last year.

Free cash flow provided another bright spot in the results. The company generated $189.6 million in free cash flow, a major turnaround from the negative $114.7 million reported a year earlier.

GameStop’s balance sheet remains strong with cash reserves exceeding $6 billion. This hefty cash position has given the company flexibility to pursue new investment strategies.

Bitcoin Investment Strategy

The most eye-catching news from the earnings report was GameStop’s cryptocurrency purchases. The company revealed it bought 4,710 Bitcoin between May 3 and June 10 of this year.

The retailer didn’t disclose the average purchase price for these Bitcoin acquisitions. Based on current Bitcoin prices, these holdings are worth approximately $516.6 million.

This marks GameStop’s entry into the cryptocurrency space as a corporate treasury strategy. The company previously announced plans to invest excess cash in risk assets including crypto and stocks.

GameStop appears to be following a similar playbook to MicroStrategy, the software company that has become known for its aggressive Bitcoin accumulation strategy. This was GameStop’s first foray into Bitcoin investing, starting in May 2025.

Wall Street Remains Skeptical

Despite the earnings beat, analyst sentiment toward GameStop remains cautious. Only one Wall Street analyst currently covers the stock with a formal rating and price target.

That lone analyst maintains a “Sell” rating on GameStop shares. The price target sits at $13.50, representing a potential 55% decline from current trading levels around $30.15.

The disconnect between the stock’s current price and analyst expectations highlights the ongoing debate about GameStop’s valuation. Some valuation models suggest the stock could be overvalued by as much as 68%.

GameStop’s stock has shown volatility over recent months. The shares gained 33% over the past 12 weeks leading up to the earnings announcement.

The company’s strategic pivot toward cryptocurrency investments adds another layer of complexity to its valuation story. Investors now must consider both the traditional retail business performance and the potential impact of Bitcoin price movements on GameStop’s financials.

GameStop made its first Bitcoin purchase in May 2025 and completed additional acquisitions through June 10, bringing total holdings to 4,710 Bitcoin worth $516.6 million at current market prices.

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