GameStop (GME) Hits Operating Milestone Despite Weakness in Core Sales

On September 8, GameStop Corp. (NYSE:GME) revealed its second quarter results, delivering an operating income of $160.2 million, which is the highest second-quarter figure in the company’s history. On adjusted basis, the company generated $158.7 million in operating income, a sharp surge relative to $64.7 million during Q2 FY25. Looking forward, the management has forecast a full-year FY26 adjusted EBITDA of more than $650 million, compared to its previous guidance exceeding $600 million.

Collectibles Surge Supports Twofold Increase in EBITDA

For the reported quarter, the standout product category was Collectibles, with net sales of $356.3 million. This represented a 57% year-over-year jump, as the category now accounts for 45.1% of total net sales, compared to just 23.4% in 2025. Selling, general and administrative (SG&A) expenses were cut down to $187.1 million, from $218.8 million incurred during the same period last year. This helped quarterly adjusted EBITDA to exhibit more than a twofold increase, from $75.7 million in Q2 FY25 to $174 million in the recent period. Adjusted net income for the quarter also went up from $138.3 million in the second quarter last year to $161.1 million for Q2 FY26.

Subsequent to the quarter, GameStop reduced its long-term debt to approximately $2.8 billion through privately negotiated exchanges completed on September 3 that retired roughly $1.4 billion of its 0.00% Convertible Senior Notes due 2030 and 2032. Moreover, the company’s investment holdings also remain strong. As of August 1, it owned around 43.4 million of eBay’s common shares, which carry a fair value of around $4.9 billion.

Revenue Slide and Shift in Liquidity

Bears point to an 18.7% year-over-year decline in Net Sales, from $972.2 million in Q2 FY25 to $790.2 million in the recent quarter. The decline can be attributed to several factors, such as last year’s launch of Nintendo Switch 2, which creates a stronger base for comparison. Other contributing factors include GameStop’s divestiture of its operations in France, and store closures during the quarter.

The company’s cash-heavy liquidity position changed significantly during the quarter as the company redeployed capital into its eBay investment. Its cash, equivalents and marketable securities balance stood at $5.1 billion, compared to $8.7 billion by the end of second quarter in 2025. In addition to that, GameStop recorded a $75 million loss on its digital holdings and the related receivables, reflecting the decline in Bitcoin’s market price and its exposure through digital assets and related receivables.

Institutional Sentiment

Institutional interest across 1,000+ hedge funds tracked by Insider Monkey shows a marginal decrease in institutional exposure to the stock. According to 13F filing data, total number of hedge funds that held positions in the stock dropped to 26 by the end of second quarter in 2026, relative to 29 in the previous quarter. Short interest of 10.71% remains moderately high, pointing to some level of institutional pessimism around the stock.

Among broader institutional investors, with 36.75 million shares, BlackRock is the largest institutional investor owning 7.28% of the outstanding shares. Other notable institutional names include Vanguard Capital Management and Vanguard Portfolio Management, which held 3.64% and 3.44% of outstanding shares, respectively.

Verdict

The second quarter print indicates that GameStop is a specialty retailer still undergoing a transition. Cost discipline and collectibles growth offer encouragement. The current investment portfolio, that includes substantial eBay holdings, carries significance as well. For investors, durability of collectibles momentum will be a critical factor in the coming quarters.

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