GameStop Stock Jumps After Stronger Profit Preview and Cash Settlement of Convertible Notes

GRAPEVINE, Texas — GameStop Corp. shares rose more than 4 percent Monday after the video-game retailer posted preliminary second-quarter results showing higher profit on lower sales and revised a large convertible-note exchange to pay more in cash and fewer new shares.

The stock traded around $18.64, up 77 cents, or about 4.3 percent, by late morning in New York. The move followed two company releases issued before the open: unaudited figures for the 13 weeks ended Aug. 1 and an amendment to agreements covering about $1.4 billion of zero-coupon convertible notes.

GameStop said it expects net sales of $780 million to $800 million, down from $972.2 million a year earlier. The company attributed the drop mainly to last year’s Nintendo Switch 2 launch, planned store closures and the sale of its France business. Operating income is projected at $150 million to $170 million, compared with $66.4 million a year ago. Net income is expected at $290 million to $310 million, up from $168.6 million.

Those profit figures include about $238 million of net gains tied to an eBay Inc. derivative and equity stake, partly offset by a loss of roughly $75 million on digital assets and related receivables. During the quarter GameStop converted a previously disclosed eBay derivative into a direct holding. As of Aug. 1 it held about 43.4 million eBay shares. Cash, cash equivalents and marketable securities are expected at $5.05 billion to $5.07 billion, down from $8.694 billion a year earlier after that conversion.

The sales range came in above a Wall Street consensus near $757 million cited by market data services, even though revenue is still falling year over year. The profit beat is less clean: a large share of net income comes from investment marks, not from selling games and consoles.

Separately, GameStop amended exchange deals first announced Aug. 3. Holders of certain 0.00% convertible notes due 2030 and 2032 had agreed to swap about $1.4 billion of principal for stock based on a 35-day volume-weighted average price that began Aug. 3. The company is ending the remaining pricing window. Shares will cover the elapsed portion of the period. The rest will be paid in about $358.4 million of cash. Total new stock is now fixed at about 55.5 million shares. Closing is expected around Sept. 3. About $2.8 billion of notes would remain outstanding after the deal.

The original all-stock structure had weighed on the shares in August as investors priced in dilution. Fixing the share count and substituting cash removed some of that uncertainty. The stock had slipped toward a 52-week low near $17.79 in recent weeks after the first exchange announcement and after reports that Chief Executive Ryan Cohen might rethink a large eBay bid.

Cohen earlier this year made an unsolicited proposal to buy eBay for about $56 billion. Dow Jones reported that eBay rejected the offer as “neither credible nor attractive.” Cohen has said publicly he would keep pursuing a transaction. GameStop’s eBay stake and the mark-to-market gains in the quarter keep that campaign on the balance sheet even if a full takeover does not close.

The core retail story is mixed. Higher operating income on a smaller store base and without the France unit suggests cost control and a richer mix. The comparison with last year’s Switch 2 launch also inflates the sales decline. Collectibles, trading cards and delivery experiments — including a tie-up with Uber Eats announced in July — remain secondary to the cash pile and the investment book.

Market value is about $8.4 billion. Trailing twelve-month revenue is near $3.7 billion. The company has no regular dividend. Institutional ownership is a minority of the float, and the stock still trades with the volatility that has followed it since 2021.

Monday’s bounce does not erase the tension in the model. GameStop is shrinking its physical footprint, booking large paper gains on a public-company stake, and using cash to cap how many new shares a debt swap creates. Investors who wanted a cleaner operating print still have to wait for fully audited results and a complete earnings call. Those who wanted less dilution got a clearer share count and a cash check.

What happens next is mostly mechanical. The note exchange is scheduled to settle within days. Full second-quarter financials will show how much of the $150 million-plus operating profit holds after final adjustments. The eBay position will keep moving with that stock. And the video-game calendar — new hardware cycles, software slates, collectible drops — will decide whether sales can stabilize once the Switch 2 anniversary rolls off.

For one session, the combination of a profit preview above last year and a smaller equity issuance was enough to lift a name that had spent August under pressure. The numbers GameStop put out are preliminary and unaudited. They are also specific: sales down, operations up, investments noisy, dilution capped. That is the report the market traded.