On September 8, 2026, the Wall Street Journal reported GameStop Corp. (NYSE:GME) second-quarter net income of $298.7 million, up from $168.6 million a year earlier, even as revenue fell to $790.2 million from $972.2 million. The video-game retailer raised its full-year adjusted EBITDA outlook to more than $650 million from a prior target of more than $600 million.
The results were boosted by gains linked to GameStop’s equity stake in eBay. Collectibles revenue jumped 57% year over year to about $356.3 million, now representing 45.1% of total sales and helping push gross margin to 43.7% from 29.1% a year earlier.
Bull Case
GameStop Corp. (NYSE:GME)’s move toward collectibles is improving its operating profitability despite lower revenue. Gross margin nearly doubled as the business raised its exposure to higher-margin collectibles. Adjusted EBITDA rose to roughly $174 million from $75.7 million a year earlier. The improvement shows that GameStop can generate stronger earnings even as its standard video-game business contracts.
GameStop also strengthened its financial position during the quarter since operating income reached $160.2 million, the highest for any second quarter in company history. The company retired approximately $1.4 billion of convertible notes and reduced its long-term debt to about $2.8 billion. The stronger balance sheet gives GameStop greater financial flexibility as it develops its collectibles business.
Management also raised its full-year adjusted EBITDA outlook to more than $650 million from more than $600 million previously. The $2 billion share-repurchase authorization could give GameStop another way to return capital to shareholders if the company is generating cash and improving its profitability.
Bear Case
GameStop Corp. (NYSE:GME)’s core video-game business keeps on contracting sharply. Video-game revenue fell to about $263.2 million from $494.6 million a year earlier, while total revenue declined nearly 19% to $790.2 million. Store closures, the French operations divestiture, and the comparison with the prior year’s Nintendo Switch 2 launch contributed to the decline. It leaves GameStop increasingly dependent on collectibles to offset weakness in its legacy business.
The quarter’s net income also received a substantial boost from investment-related gains rather than core retail operations. GameStop recorded approximately $238 million in net gains related to its eBay investment. A roughly $75 million loss on digital assets and related receivables shows how its investment portfolio can create significant swings in reported earnings. Hence, investors need to distinguish the company’s improving operating profitability from gains and losses tied to its investment holdings.
GameStop also needs to prove that collectibles can sustain its earnings growth as its traditional business shrinks. The firm has increased its exposure to collectibles, but it must grow that category quickly enough to offset declining video-game sales. If collectibles growth slows, GameStop could struggle to maintain the higher margins and profitability that currently hold up its improved full-year outlook.
Hedge Fund Sentiment
GameStop Corp. (NYSE:GME)’s hedge fund count slipped to 26 in the second quarter from 29 in the first, with position value also declining to $252.5 million from $293.1 million, according to Insider Monkey’s database. Best Buy, a larger electronics retailer competing for some of the same collectibles and gaming dollars, saw hedge fund position value grow to $1.41 billion from $883.8 million on a roughly stable holder count of 44.
Conclusion
GameStop Corp. (NYSE:GME)’s stronger margins, record second-quarter operating income of $160.2 million, and raised full-year adjusted EBITDA outlook show that its shift toward collectibles can improve profitability despite declining video-game sales. Nonetheless, investment-related gains contributed significantly to reported earnings, while the company’s traditional business is shrinking. So GameStop needs to sustain collectibles growth and convert its improved margins into recurring operating earnings if it wants to make its turnaround durable and create lasting value for shareholders.
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