GameStop Q1 2025 earnings preview: Bitcoin investment adds new dimension to transformation story
The video game retailer is set to report first-quarter 2025 results on 10 June, with its recent $515 million Bitcoin investment creating a new focal point for investors.
Analyst expectations show improving fundamentals
GameStop is set to release its first quarter (Q1) fiscal 2025 earnings after the market closes on Tuesday, 10 June 2025. Analysts project revenue to decline approximately 14.5% year-over-year (YoY) to around $754.2 million, down from $881.8 million in the same quarter last year.
However, consensus estimates suggest an earnings per share (EPS) of $0.04, a significant improvement from a loss of $0.12 per share in the prior year's Q1. This expected return to profitability represents a notable turnaround in GameStop's financial trajectory.
The anticipated profitability improvement is primarily attributed to cost reductions rather than revenue growth. Investors will be keen to assess the sustainability of these cost-saving measures, particularly as the company continues to navigate the challenging retail gaming environment.
GameStop's cash and equivalents stood at $4.775 billion at the end of the previous quarter. Analysts expect this to increase to approximately $5.95 billion, bolstered by a $1.3 billion convertible notes offering in March that has funded the company's recent strategic initiatives.
Bitcoin investment creates new strategic direction
On May 28 2025, GameStop announced the purchase of 4,710 Bitcoins, valued at over $515.7 million, as part of a strategy to incorporate bitcoin as a reserve asset. The investment was funded through a $1.3 billion convertible bond sale initiated in March.
The announcement led to an initial 4.4% rise in GameStop's shares during pre-market trading. However, the stock experienced volatility, with a 10.9% decline later that day, reflecting investor uncertainty about the company's new strategic direction.
By investing in Bitcoin, GameStop aims to rejuvenate investor interest and diversify its financial strategy amidst challenges in its core business of physical video game sales. The move aligns with CEO Ryan Cohen's vision to transform the company and reflects a broader trend of corporations adding Bitcoin to their treasuries.
This strategic pivot represents one of the most significant moves by GameStop in recent years, potentially transforming it from a traditional retailer into a hybrid entity with substantial cryptocurrency exposure. The timing and scale of this investment will likely dominate discussions around the upcoming earnings report.
Stock performance mirrors Bitcoin correlation
GameStop's stock movements closely mirrored Bitcoin's performance over the past few days. As Bitcoin came off its all-time high of nearly $112,000, GameStop's shares saw corresponding declines. This correlation suggests that at least some investors are viewing GameStop as a proxy for cryptocurrency exposure.
This correlation fundamentally changes the investment thesis for GameStop, introducing cryptocurrency volatility as a significant factor in the company's share price performance. Traditional retail metrics may become secondary to Bitcoin price movements in determining short-term stock performance.
The cryptocurrency correlation adds a new layer of complexity for analysts attempting to value GameStop based on traditional retail metrics. The company's substantial Bitcoin holdings now represent a significant portion of its market value, potentially overshadowing operational performance.
For traders and investors, this correlation creates both opportunities and risks, as GameStop's stock may now experience the extreme volatility typically associated with cryptocurrency markets rather than traditional retail stocks.
Operational restructuring continues globally
The company has exited operations in Italy and Germany and announced plans to sell its French operations, reflecting a strategic shift to streamline its international presence. These moves are part of broader efforts to focus resources on more profitable markets and reduce operational complexity.
Store closures and international divestitures will likely result in one-time charges in the current or upcoming quarters, though they should contribute to improved operational efficiency over time. The impact of these restructuring activities on cash flow and profitability will be closely monitored.
The strategic focus on core markets represents a pragmatic approach to the challenging international retail environment. European gaming markets have proven particularly difficult for physical game retailers, making these exits potentially beneficial for long-term profitability.
Any updates on domestic store optimisation and closure programmes will also be important, as GameStop continues to rightsize its physical footprint to match changing consumer behaviour and digital gaming trends.
Financial strategy and capital allocation
The $1.3 billion convertible notes offering has significantly strengthened GameStop's balance sheet while providing funding for strategic initiatives including the Bitcoin investment. This capital raise demonstrates management's commitment to transformation, though it also creates future dilution risk for shareholders.
Convertible notes provide GameStop with cheaper financing than traditional debt while giving investors potential upside participation through conversion features. The terms and conditions of these notes will influence future capital allocation decisions and potential shareholder dilution.
The substantial cash position, now enhanced by the convertible offering, provides GameStop with significant strategic flexibility. However, the effectiveness of capital deployment will be crucial for justifying this financial structure and maintaining investor confidence.
Interest income from the large cash position should provide some earnings support, though this will be offset by interest expenses on the convertible notes. The net impact on financial performance will depend on prevailing interest rates and cash deployment strategies.
Market sentiment and analyst perspective
Despite its surprise profit in the January 2025 full-year results, GameStop's stock has experienced volatility, influenced by strategic announcements and market speculation. Analysts remain cautious, with concerns about the company's long-term strategy and the sustainability of recent profitability improvements.
The Bitcoin investment has divided opinion among analysts and investors. Supporters view it as a bold move that could generate substantial returns and rejuvenate the company's growth prospects. Critics argue that it represents a departure from core retail operations and introduces unnecessary volatility.
Traditional retail analysts face challenges in evaluating GameStop given its hybrid nature combining retail operations with significant cryptocurrency exposure. This complexity may lead to wider analyst estimate ranges and increased forecast uncertainty.
The meme stock characteristics that have historically driven GameStop's share price remain relevant, though the Bitcoin investment adds a new fundamental element that could attract different investor types, including cryptocurrency enthusiasts and institutional investors seeking Bitcoin exposure.
Key metrics to watch in Q1 results
Beyond traditional retail metrics, investors will now need to monitor the mark-to-market impact of GameStop's Bitcoin holdings on quarterly earnings. Given Bitcoin's volatility, this could create significant earnings fluctuations unrelated to operational performance.
Comparable store sales trends will remain important for assessing the health of GameStop's core retail business. Any stabilisation or improvement in these metrics would be particularly significant given the focus on cost reduction rather than revenue growth.
Operating leverage from cost reduction initiatives should be evident in improved margins and profitability metrics. The sustainability of these improvements will be crucial for maintaining the positive earnings trajectory expected by analysts.
Cash flow generation from operations, excluding the impact of Bitcoin investments and convertible note proceeds, will provide insights into the underlying health of GameStop's retail business and its ability to fund ongoing transformation initiatives.
Analyst rating and GameStop share price technical analysis
GameStop has a TipRanks Smart Score of ‘4 Neutral’ and is rated as a ‘sell’ with 0 ’buy’, 0 ‘hold’ and 1 ‘sell’ recommendation (as of 02/06/2025).
GameStop TipRanks Smart Score chart
Over the past few weeks the GameStop share price, down around 5% year-to-date, has become more volatile again, having briefly overcome but not managed to remain above its $34.37 December peak, in May 2025.
GameStop weekly candlestick chart
Were the GameStop share price to fall through its April-to-June uptrend line at $29.19 and close below it on a daily chart closing basis, the $28.00-to-$25.67 mid-April-to-mid-May sideways trading range may be re-integrated.
GameStop daily candlestick chart
While the early May low at $25.67 and the 200-day simple moving average (SMA) at $25.51 underpin on a daily chart closing basis, the GameStop share price is deemed to remain within a wider sideways trading range.
A drop below the $25.50 mark would likely lead to the April low at $20.73 being revisited.
For a medium-term bullish reversal to occur, a rise and daily chart close above the May peak at $35.81 would need to be seen. In this scenario the June 2024 high at $48.00 may be back in the frame.
While no rise above the May peak at $35.81 ensues, the GameStop share price is more likely to slide again rather than see another upsurge in the near future.
How to trade GameStop's evolving investment thesis
For those looking to trade GameStop around the earnings announcement, the combination of retail transformation and cryptocurrency exposure creates unique considerations.
- Research both GameStop's retail transformation progress and Bitcoin market dynamics, as both factors now influence the stock's performance.
- Consider the increased volatility from cryptocurrency correlation when sizing positions and setting risk management parameters.
- Open an account with IG by visiting our website and completing the application process.
- Search for 'GameStop' or its ticker 'GME' on our trading platform or app.
- Implement robust risk management given the dual volatility sources from retail operations and cryptocurrency exposure.
Spread betting and CFD trading can be particularly valuable for trading GameStop, allowing you to manage risk through guaranteed stops while potentially profiting from both upward and downward price movements driven by earnings or Bitcoin price action.
For investors with longer-term views, share dealing provides direct exposure to GameStop's hybrid retail-cryptocurrency strategy, though investors should be prepared for continued high volatility and execution risk in the transformation strategy.
Investors will be closely monitoring the upcoming earnings report for insights into GameStop's operational efficiency, strategic direction, and the impact of recent initiatives on its financial performance. The Bitcoin investment adds a compelling new chapter to GameStop's transformation story, though it also introduces additional complexity and volatility that investors must carefully consider when evaluating the company's prospects.
Connect with us
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.