Earnings Preview | Facing the pain of transformation and the variables of cryptocurrency, can GameStop's Q1 performance break through market pessimistic expectations?

According to Zhitong Finance APP, GameStop (GME.US) is expected to announce its first-quarter results for the fiscal year 2025 after the market closes on June 10, 2025, Eastern Time. The market anticipates that GameStop's revenue for the first quarter of 2025 will reach approximately $754.2 million, a year-on-year decline of about 14.5%. However, earnings per share (EPS) are expected to reach $0.04, a significant improvement compared to a loss of $0.12 per share in the same period last year, indicating a considerable turnaround.

Regarding cash position, after successfully issuing $1.3 billion in convertible bonds in March, analysts expect cash and cash equivalents to increase from $4.775 billion to approximately $5.95 billion. Additionally, GameStop currently holds 4,710 bitcoins, which were valued at over $515.7 million at the time of purchase, but the volatility of bitcoin's market price makes it an uncertain factor affecting financial performance. In terms of international operations, the latest updates on the closure of stores in Italy and Germany, as well as exit costs, and the plan to sell the French business are all worth close attention.

Looking back at the previous quarter, GameStop's earnings exceeded expectations. In terms of earnings per share, the company returned to profitability, compared to a loss in the same period last year. Revenue for the first quarter of 2024 was $881.8 million, although it has declined from previous highs. In response, CEO Ryan Cohen stated, "We are committed to transforming GameStop into a technology company focused on gaming, collectibles, and blockchain. Our investment in bitcoin is an important strategic move to diversify our funding and explore the potential of digital assets."

However, despite improvements in operations, GameStop's stock price has fallen by about 5% year-to-date. Although GameStop has made progress in reducing operating costs, the physical retail gaming market itself faces numerous challenges, leading investors to remain cautious about the sustainability of its transformation.

Investor Focus

First, the announcement of the bitcoin purchase plan on May 28, 2025, is undoubtedly a focal point. Investors will closely monitor the impact of its bitcoin investment on quarterly earnings, as well as management's outlook on future cryptocurrency investments. Currently, the correlation between GameStop's stock price and bitcoin's movements has strengthened, and the investment logic has changed accordingly, with cryptocurrency volatility becoming a key factor affecting stock performance.

Secondly, GameStop's exit from the European market and the optimization of domestic stores are crucial actions. The company is streamlining its international operations and concentrating resources on markets with greater profit potential. However, closing stores and divesting international assets may incur one-time costs, but in the long run, these measures will help improve operational efficiency.

GameStop's transformation towards digital gaming, the NFT market, and technology-related initiatives is also under close scrutiny. The company is currently in a challenging phase of transitioning from physical gaming to digital gaming, and the progress of this transformation will influence investors' confidence in its future development Finally, the issuance of $1.3 billion in convertible bonds undoubtedly strengthens GameStop's balance sheet, but at the same time, it poses potential future equity dilution risks for shareholders. The effectiveness of capital allocation is particularly important for maintaining investor confidence.

Is GameStop Worth Buying?

Currently, GameStop has a smart score of "4 Neutral" on TipRanks, rated as "Sell," which includes 0 "Buy," 0 "Hold," and 1 "Sell" recommendation (as of June 2, 2025).

Figure 1

After significant fluctuations since 2025, GameStop's stock price has fallen about 5% year-to-date, with the recent price around $30. Ahead of the earnings report to be released this week, the options market has already priced in increased volatility, indicating that the stock price may experience significant fluctuations regardless of whether it rises or falls.

With the introduction of Bitcoin investment factors, GameStop's trading model has become more complex, and the stock is now more closely linked to cryptocurrency trends, being more affected by cryptocurrency price fluctuations compared to traditional retail indicators. Although GameStop has a history of significant volatility during earnings reports, the actual price movements this time may differ greatly from the influences of the options market.

In the past few weeks, GameStop's stock price has been quite volatile, briefly breaking above the peak of $34.37 on May 12, 2025, but unfortunately failing to hold that level. Since announcing its investment in cryptocurrency, the correlation between its stock price and Bitcoin price trends has been increasing, bringing new technical dynamics to traditional chart patterns.

From a technical perspective, the upward trend line from April to June (at $29.19) is a key support level. If it falls below this level and cannot effectively rebound, the stock price may return to the sideways trading range of $28.00 to $25.67 from mid-April to mid-May.

Figure 2

Additionally, the low point of $25.67 in early May and the 200-day moving average of $25.51 provide important downward support on the daily closing price chart. If it effectively falls below the $25.50 level, the stock price may even test the low of $20.73 in April again.

On the upside, the initial resistance level is at the May high of $35.81. If it can consistently break above this level, it may achieve a mid-term bullish reversal, with a target potentially pointing to the June 2024 high of $48.00 However, considering the current situation, although GameStop's stock price has not temporarily broken through the high of $35.81 in May, its recent stock price trend is more likely to decline again rather than continue the upward trend.

Figure 3