What Happened?
Shares of video game retailer GameStop (NYSE:GME) fell 5.2% in the afternoon session after the company reported underwhelming first-quarter 2025 results. Sales missed expectations, down a whopping 17%, signaling persistently soft demand for its core offerings. The miss was driven by shrinking sales in hardware and software, wiping out gains in the collectibles business that grew to nearly 30% of total sales.
On the other hand, GameStop blew past analysts' gross margin and EPS expectations, and it generated positive free cash flow. It also purchased 4,710 Bitcoins between May 3, 2025 and June 10, 2025. Overall, this was a mixed yet weaker quarter, highlighting persistent sales issues.
After the initial drop the shares shed some of the losses and close the day $28.51, down 5.5% from previous close.
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What The Market Is Telling Us
GameStop’s shares are extremely volatile and have had 44 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock dropped 11.4% on the news that the company announced its first purchase of Bitcoin (4,710 Bitcoin) valued at more than $500m. The purchase was announced on a day when crypto assets were losing momentum. The market's reaction, amid declining sales, also likely reflected uncertainty among investors. The weak reaction suggested that many shareholders were likely unsure whether this shift toward crypto represented a true diversification or a high-risk distraction from core issues holding back growth.
GameStop is down 12.6% since the beginning of the year, and at $26.85 per share, it is trading 23.3% below its 52-week high of $35.01 from May 2025. Investors who bought $1,000 worth of GameStop’s shares 5 years ago would now be looking at an investment worth $24,531.
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