GameStop Partners with AI Startup InvestorSight and Advisory Firm Longacre Square.

InvestorSight, an AI startup, has partnered with Longacre Square, an advisory firm. GameStop Corp. operates 4,169 stores across the US, Canada, Australia, and Europe, offering games and entertainment products. Its segments include retail operations, with the majority focused on games, entertainment products, and technology. GameStop also operates under the names GameStop, EB Games, Micromania, and Zing Pop Culture, and publishes Game Informer magazine.

GameStop (NYSE: GME), a retail giant specializing in games and entertainment products, has been a subject of significant interest in recent months. Known for its volatile stock price and Bitcoin reserve treasury strategy, GameStop has been both celebrated and criticized by investors. Despite the company's reputation, a closer look at its recent financial performance reveals a compelling case for investment.

Financial Performance

GameStop's latest earnings report shows impressive sales growth. In the second quarter of 2025, sales grew by 22% year-over-year (y/y) to $972.2 million, according to a Seeking Alpha article (GameStop: Not Just A Bitcoin Story, The Business Is Thriving). This growth was driven primarily by the collectibles segment, particularly Pokémon cards, which now constitute over a quarter of the company's revenue. The release of the Nintendo Switch 2 also contributed to the hardware sales growth, which surged by 31% y/y in Q2, the same piece noted. These trends indicate a strong underlying demand for the company's core products.

Profitability and Balance Sheet

GameStop's profitability has also shown signs of improvement. The company reported a 6.7% adjusted EBITDA margin for the first half of 2025, up from -2.9% in the same period last year, the article reported. This turnaround in profitability is a positive indicator for the company's financial health.

The balance sheet is another compelling aspect of GameStop's financials. With $8.69 billion in cash reserves and $4.16 billion in long-term debt, the company has a net cash position of $4.53 billion, the analysis stated. Additionally, GameStop holds $528.6 million worth of Bitcoin, which, at current prices, adds another $542 million to the company's total net cash position, bringing it to $5.07 billion, the same report added.

Valuation

At current share prices near $23, GameStop's market capitalization stands at $10.52 billion, according to the Seeking Alpha piece. After accounting for the company's net cash position (including Bitcoin), the enterprise value drops to $5.45 billion. This valuation, when combined with a modest revenue growth assumption and a 7.8% adjusted EBITDA margin, results in a reasonable valuation multiple of 16.5x EV/adjusted EBITDA as estimated in that analysis.

Risks and Opportunities

While GameStop presents an attractive investment opportunity, it is not without risks. The recent issuance of warrants by the company could lead to dilution if share prices rally beyond $32, the article warned. Additionally, the volatility of trading card sales and the potential for further investment in cryptocurrencies pose additional risks, the piece noted.

Conclusion

GameStop's recent financial performance and strong balance sheet position it as a potential contrarian investment. While the company's reputation as a meme stock may deter some investors, the underlying fundamentals suggest that it may be a reasonable diversification play for investors seeking exposure to the gaming and entertainment sector. As the company continues to rebound to meaningful sales growth and profitability, it may be worth considering a small position in GameStop.

References

GameStop: Not Just A Bitcoin Story, The Business Is Thriving — https://seekingalpha.com/article/4829630-gamestop-not-just-a-bitcoin-story-the-business-is-thriving