GameStop (GME) is trading higher after hours today following its fourth-quarter 2025 results, with adjusted earnings per share of $0.29 significantly surpassing analyst expectations of $0.09, despite a considerable revenue decline to $1.28 billion from $1.79 billion year-over-year.
The retailer’s profitability showed impressive growth, with net income more than doubling to $131.3 million from $63.1 million in the prior year period, primarily driven by successful cost-cutting initiatives and improved sales margins. While traditional revenue streams experienced decline, the collectibles division emerged as a bright spot with a 15.8% revenue increase, indicating successful diversification of the business model.
GameStop HODLS Its Cash Hoard
The company's financial position has strengthened considerably, with cash and marketable securities reaching $4.77 billion, a substantial increase from $1.2 billion in the previous year. In a notable development, GameStop's board has approved the addition of Bitcoin (BTCUSD) as a treasury reserve asset, following in the footsteps of MicroStrategy (MSTR), now known as Strategy.
Traders are cheering GME’s use of its cash hoard to take this bold step into digital asset integration, as evidenced by the after-hours rally. The meme stock is up 7.48% in electronic trading, chipping away at its year-to-date decline.
Is GME Stock a Buy?
The combination of exceeding earnings expectations, successful cost management, and the innovative approach to treasury management through Bitcoin integration suggests GameStop is effectively navigating its transformation while maintaining financial stability. The company's ability to more than double its net income while implementing strategic changes demonstrates strong execution capabilities under challenging market conditions. Collectively, these developments indicate GameStop's commitment to evolving its business model, which could set a foundation for potential future growth.
For now, though, Wall Street remains completely unimpressed, with the one remaining analyst in coverage maintaining a “Strong Sell” recommendation. By traditional valuation metrics, GME also presents substantial risks, at more than 365 times forward adjusted earnings and 2.85 times forward sales. Given its historical volatility, ongoing turnaround, and fundamental challenges in the retail gaming sector, GME is best reserved for investors with a long-term horizon and a fairly high risk tolerance.
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