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September 11, 2025
Has GameStop Finally Found Solid Footing, Or Will its Rally Be Short-Lived?
GameStop has been the subject of much controversy in the retail space for some years now, with its business model frequently being compared, at least tangentially, to Blockbuster’s — and then there was the meme stock moniker it attracted by way of hordes of retail investors driving a short squeeze in 2021.
Since then, however, the stock eventually plummeted, and GameStop enacted a wave of store closures — store closures which are expected to continue throughout 2025 and beyond.
GameStop Sees Strong Q2 Results, Bitcoin Holdings Appreciate
More recently, however, GameStop recently delivered very strong Q2 results. According to a press release, net sales came in at $972.2 million versus $798.3 million in the year-ago period, and SG&A expenses trended downward to $218.8 million set against $270.8 million a year prior.
Further, operating income improved to $66.4 million for the second quarter, versus an operating loss of $22 million in Q2 2024. Net income saw a significant improvement to $168.6 million, compared to a net income of $14.8 million for the second quarter of last year.
And as Retail Dive reporter Dani James outlined, the company’s increased position in Bitcoin (to the tune of 4,710 Bitcoin, or ~$500 million at the time of purchase, in May) lead to an unrealized gain of $28.6 million thus far. Sales in hardware, accessories, and notably, collectibles drove YoY growth — likely due to the recent launch of the widely successful Nintendo Switch 2 — while software sales continued a downward spiral, as physical copies continue an exit from the broader video game market in favor of digital replacements sold via Nintendo, Sony, Microsoft, and Valve storefronts, among others.
Sherwood News markets editor Luke Kawa also weighed in with a brief analysis of the company’s current strengths, emphasizing, like James, that collectibles had driven a substantial portion of GameStop’s recent success story, perhaps surprising analysts in the doing.
“GameStop’s collectibles business played a big role in why it smashed Q2 revenue expectations! Sales in this segment exceeded $227 million, while the two analysts that provided forecasts had an average estimate of $170.4 million. Fiscal year to date, sales of collectibles make up 25.8% of its revenues, up from 16.4% at this time last year,” Kawa wrote.
The question remains: Will the strength in collectibles, and the spend coming from collectors — especially “kidults” — linger, or fade away?
GameStop Plans To Close More US Locations After Selling Off Canadian and French Operations
The games and collectibles retailer has been busy trimming its footprint back, having sold its Canadian business a few months ago, and with the sale of its operations in France projected to close within the next 12 months.
In the meantime, GameStop closed almost 600 stores stateside over the course of fiscal 2024. The company stated that a “review is ongoing and a specific set of stores has not been identified for closure, we anticipate closing a significant number of additional stores in fiscal 2025,” as James detailed.
Discussion Questions
Has GameStop found its true turnaround point as massive cuts to its footprint, pivot into collectibles, and move into Bitcoin show strong profits? Why or why not? What major headwinds remain?
What are some major criticisms, in your opinion, that could be said of GameStop’s current operating practices? Conversely, on what fronts is it making the right decisions?
Poll
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David Biernbaum
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As a stand-alone set of numbers, the Q2 figures from GameStop look robust. However, they need to be placed in context. Q2 had a lot of pull forward spending on hardware, which helped. The numbers were also delivered against the backdrop of an incredibly weak prior year when Q2 revenue dropped by 45.8%. So, this is not a definitive signal that all is well. That said, GameStop is disposing of underperforming parts of the business. It is also making some interesting moves with Bitcoin which could yield some gains – but really, this is a game of financial speculation, not a retail play!
They’ve adopted their name as a business plan.(we’ll have to see if the “Stop” part materializes as well)
I like this game of aptronyms! Target becoming a target for Walmart and Amazon. I am sure there are many more!
While GameStop’s latest results show short-term profit improvements, I remain skeptical that this represents a true turnaround. Much of the momentum comes from one-time factors like Bitcoin gains and a collectibles boom that feels more fad-driven than sustainable. Shrinking the footprint and trimming costs are necessary moves, but they don’t solve the core issue: the video game industry has shifted decisively to digital, leaving GameStop’s traditional retail model on a steadily eroding foundation.
The headwinds are structural and long-term. Digital downloads, subscription services, and cloud gaming continue to chip away at the very categories where GameStop once held relevance. Collectibles may buy some time, but they are volatile, and leaning into cryptocurrency only adds risk, not stability. Store closures may improve the bottom line now, but they also reduce brand presence and weaken customer relationships in the long run.
In my view, GameStop’s strategy looks more like short-term financial engineering than a durable transformation. Unless the company finds a way to redefine its role in a gaming ecosystem that increasingly bypasses brick-and-mortar retail, these “turnaround” signs are more a pause than a pivot.
It sounds like that while they’re moving ever more away from games – likely a wise move – what they’re moving toward is rather episodic and (while not quite random) unplanned…what’s next if – or when – the collectible fad ends? It’s not exactly confidence building, and, unfortunately, one string of words (“company’s increased position in Bitcoin”) furrows my brow: my Magic 8 Ball sees more trips to the ER, if not, eventually, the morgue.
GameStop’s Q2 performance will turn out to be episodic and non-trending. Shuttering 600 US stores and eliminating Canadian and French operations will shrink the footprint, reduce high operating costs, and allow for capital reallocation. We are still left with a masterclass of financial engineering, not a retail turnaround. GameStop’s meme phenomenon is viral and spectacular but unsustainable. Five years ago, in another Retailwire discussion, we pondered if GameStop would play better online (https://retailwire.com/discussion/will-gamestop-play-better-online/); I offered that “the physical footprint of games is smaller, and all growth and dominant future revenue will be online.”
GameStop has not effectively leveraged its physical store assets as gaming continues to shift online, competing with a variety of existing and emerging competitors that have more sustainable business models and cost structures. GameStop’s path forward requires answering what unique value physical gaming spaces provide that purely digital competitors cannot – community, experience, or specialized services. Without that clarity, even successful quarters mask continued strategic drift.
A major criticism of GameStop’s current operating practices is the difficulty it has in modernizing its physical retail stores in an increasingly digital environment. By investing in its digital transformation efforts, such as expanding its e-commerce platform and exploring new revenue streams in the gaming industry, the company is making the right decisions. As the market shifts toward online shopping, GameStop might be able to remain relevant and competitive.