GameStop 2026 Q3 Earnings Strong Earnings Growth Amid Revenue Decline

The video game retailer reported mixed results, with revenue falling short of estimates while net income surged. Investors reacted cautiously, with shares declining in after-hours trading despite a sharp earnings beat. The company emphasized cost-cutting and strategic shifts in its guidance.

Revenue

GameStop’s total revenue declined 4.6% year-over-year to $821 million in Q3 2026, missing Wall Street estimates. Hardware and accessories sales accounted for $367.40 million, while software revenue fell to $197.50 million. The collectibles segment, however, showed resilience, contributing $256.10 million—up 49% from the prior year. This segment’s growth underscored the company’s pivot toward non-traditional gaming merchandise as physical sales waned.

Earnings/Net Income

The company’s profitability surged, with net income jumping 343.1% to $77.10 million in Q3 2026, compared to $17.40 million in the prior-year period. Earnings per share (EPS) rose 325% to $0.17, driven by aggressive cost management. The EPS increase marked a significant positive outcome for investors.

Post-Earnings Price Action Review

The strategy of buying GameStop shares on the earnings release date and selling after 30 days has historically underperformed, yielding a return of -56.93% over the past three years. This lags behind the benchmark return of 72.49%, with an excess return of -129.42%. The strategy’s compound annual growth rate (CAGR) of -26.75% highlights its poor performance, compounded by a maximum drawdown of 0.00% and a Sharpe ratio of -0.56, indicating no risk mitigation.

CEO Commentary

GameStop’s Q3 results reflected operational improvements, with operating income rising to $41.3 million from a $33.4 million loss in the prior year. CEO Commentary highlighted reduced SG&A expenses ($221.4 million vs. $282.0 million) and adjusted operating income of $52.1 million. The company maintained $8.8 billion in cash and $519.4 million in Bitcoin holdings, emphasizing liquidity and strategic flexibility.

Guidance

The company outlined strategic priorities, including divesting underperforming operations (Canada and France) and optimizing costs. While no explicit revenue or EPS guidance was provided, management emphasized navigating risks such as economic conditions, supply chain disruptions, and market competition. Forward-looking statements highlighted potential impacts from pop culture trends, technological changes, and Bitcoin volatility.

Additional News

1. Struggles with Digital Pivot: GameStop’s Q3 revenue of $821 million missed estimates of $987.3 million, as the company faces challenges from digital downloads and streaming platforms eroding physical sales.

2. Collectibles Growth: Collectibles revenue surged 49% to $256.1 million, driven by trading cards, figures, and nostalgia-driven merchandise.

3. Bitcoin Holdings: The company’s Bitcoin holdings stood at $519.4 million as of Q3 2026, reflecting its continued treasury strategy amid crypto volatility.