GameStop Drops as Q1 Sales Miss Offsets Earnings Beat

Revenue Miss Triggers After-Hours Slide in GameStop Shares

GameStop Corp. (NYSE: GME) shares dropped over 4% in after-hours trading Tuesday after the video game retailer posted mixed first-quarter results. Although adjusted earnings exceeded expectations, revenue came in below analyst forecasts, triggering a pullback in the stock, which had already declined 4% year-to-date before the report.

After hours on 2.4 million volume, GameStop shares are trading $28.65, down $1.50 or -4.98%.

Earnings Surprise Overshadowed by Steep Revenue Decline

GameStop reported adjusted earnings of $0.17 per share for the quarter ended April 30, significantly outperforming Wall Street’s estimate of $0.04. This marks the company’s fourth consecutive quarterly profit. However, revenue fell 17% year-over-year to $732.4 million, missing analyst expectations of $754.2 million. Net income came in at $44.8 million, a turnaround from a $32.3 million loss a year earlier.

While the earnings beat was notable, the 16.9% year-over-year drop in sales raised concerns about the company’s core operations. GameStop shares had gained nearly 36% this quarter, but the weaker revenue print now casts doubt on the sustainability of that momentum.

Bitcoin Strategy Draws Attention But Offers Limited Short-Term Support

The company did not add to its bitcoin holdings in Q1, after disclosing in May the purchase of 4,710 BTC, worth roughly $516 million at recent prices. Management confirmed no further acquisitions since then. GameStop’s pivot to cryptocurrency—mirroring MicroStrategy’s approach—has generated buzz, but traders remain cautious given the lack of transparency around purchase prices and the absence of operational guidance tied to crypto.

At quarter-end, GameStop reported $6.4 billion in cash, cash equivalents, and marketable securities, up sharply from $1 billion a year ago. While this sizeable cash reserve supports the company’s speculative asset allocation strategy, it does not offset fundamental concerns surrounding declining sales in its core retail segment.

Analyst Sentiment Remains Bearish Despite Estimate Revisions

Notably, the mean earnings estimate rose over 200% in the last three months, but analyst sentiment remains firmly negative. The sole Wall Street recommendation is a “strong sell,” with no “buy” or “hold” ratings. The median 12-month price target sits at $13.50, well below current levels.

Outlook: Bearish Short-Term View on GME

Despite the earnings beat and strong liquidity position, the significant revenue miss and lack of bullish analyst support point to a bearish short-term outlook for GME.

The after-hours decline suggests traders are prioritizing top-line performance over speculative bitcoin exposure or treasury strength. Without a clear growth catalyst in its retail business or crypto operations, GameStop stock may struggle to regain upside traction in the near term.

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