Gamers' shift to online has hit GameStop. Shares of the video game chain are falling
Video game store chain GameStop reported results for the third quarter of 2025. Revenue fell short of analysts' expectations, which led to a 4.5% drop in the company's shares on the premarket.
Details
GameStop, a company that once dominated the physical game market and a prime example of the hype surrounding the "meme stocks" of 2021, is now struggling to reinvent itself as gamers increasingly prioritize buying games online and subscription services over visiting conventional stores, Reuters points out.
Although GameStop has expanded its e-commerce platform in recent months to offer users digital merchandise and download options, and has partnered with publishers to sell exclusive editions of games and collectibles, all these efforts have yet to yield results, the agency notes:
- The company's third-quarter revenue totaled $821 million, which was below analysts' estimates compiled by LSEG: they expected to see the figure at $987.3 million.
- Earnings for the quarter rose to $77.1 million, equivalent to $0.13 per share, up from barely more than $17 million ($0.04 per share) a year ago. Excluding one-time factors - which include non-core operating adjustments - net income was 24 cents per share.
- Sales in the hardware and accessories segment declined 12% to $367.4 million and software revenue fell 27% to $197.5 million.
- Sales in the collectibles segment rose 50 percent to $256.1 million, and now account for just under a third of the company's total revenue compared to 20 percent a year earlier, The Wall Street Journal noted.
What the market is saying
According to Stocktwits, GameStop has barely participated in this year's "meme rally," with investor attention shifting to Opendoor Technologies, GoPro, Kohl's and others. Some investors expected GameStop to have a major growth strategy or a new business turnaround - especially given the solid amount of cash on its balance sheet - but that didn't happen, StockTwits elaborates.
Demand for GameStop products has been weak for the past three years, according to analysts at StockStory. Sales have declined an average of 13.8% annually. However, analysts forecast sales growth of 14% over the next 12 months - a marked acceleration over previous years. The calculation is on the company's new products, StockStory emphasizes.
Context
The challenges facing the game retailer reflect broader industry trends, Reuters notes: big publishers like Microsoft and Sony are pushing subscription and cloud services for games, reducing users' reliance on physical disks. At the same time, e-commerce giants like Amazon are becoming a more preferred shopping destination for gamers, eroding GameStop's market share.
To support its business, GameStop began investing in cryptocurrency by purchasing bitcoins in batches starting in May 2025. The value of bitcoin assets owned by GameStop was $528.6 million at the end of the second quarter of 2025, and about $519.4 million at the end of the third quarter, according to the company's quarterly report. The cryptocurrency's drop in November also affected GameStop's performance, Barrons points out, noting, however, that "bitcoin is only part of the story."
Earlier this week, bitcoin fell below $90,000, losing almost 30% relative to its October highs. On December 9, Standard Chartered analyst Jeff Kendrick changed his bitcoin price forecast: he still believes that the cryptocurrency will reach a price of $500,000, but now expects it to happen in 2030, not in 2028, as he previously estimated. In addition, Kendrick admitted that bitcoin will not reach $200,000 by the end of 2025, a prediction he has held for more than a year.
Kendrick is now betting that bitcoin will only rise to $100,000 by the end of this year. The analyst's position was influenced by the weakening of the crypto market. According to Standard Chartered, the period of active purchases of bitcoin by companies is likely to have come to an end, and in the future the growth of bitcoin price will be caused by only one factor - purchases of exchange-traded funds (ETFs).
This article was AI-translated and verified by a human editor
