GameStop (GME) Is Down 5.4% After Profit Jumps On Cost Cuts Despite Lower Sales

• In December 2025, GameStop Corp. reported third-quarter 2025 results showing sales of US$821 million, down from US$860.3 million a year earlier, while net income rose to US$77.1 million from US$17.4 million and diluted earnings per share increased to US$0.13 from US$0.04.
• Despite relatively flat sales over the first nine months of 2025 at US$2.53 billion, the company generated US$290.5 million in net income, highlighting how cost reductions and a growing collectibles segment are supporting profitability even as the core business faces pressure.
• We’ll examine how the profit improvement driven by cost cuts, despite weaker sales, is reshaping GameStop’s investment narrative for investors.

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What Is GameStop's Investment Narrative?

To own GameStop today, you need to believe that a leaner, smaller retailer can squeeze real earnings out of a shrinking core while slowly building new profit pools such as collectibles. The latest Q3 2025 result reinforces that story: sales slipped again, but net income and EPS moved higher as cost cuts flowed through and collectibles remained a rare growth area. In the short term, the key catalysts still revolve around how the company uses its sizeable cash balance, whether it can stabilise hardware and software sales, and if any concrete plan emerges to monetise its brand beyond traditional stores. This quarter’s profit jump helps the bull case on efficiency, but it also sharpens the main risk that earnings are being propped up by cuts rather than a healthier underlying business.

However, one critical risk remains that investors should keep front of mind. Despite retreating, GameStop's shares might still be trading above their fair value and there could be some more downside. Discover how much.

Exploring Other Perspectives

Eighteen fair value estimates from the Simply Wall St Community span roughly US$7 to well over US$1,000 per share, underlining just how far apart views are. Set that against a business where profits are rising mainly through cost cuts while revenue slips, and you can see why opinions on GameStop’s longer term performance diverge so sharply.

Explore 18 other fair value estimates on GameStop - why the stock might be worth less than half the current price!

Build Your Own GameStop Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your GameStop research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free GameStop research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate GameStop's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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