GameStop (GME) Bets on Bitcoin and Profitability as It Navigates a Shifting Identity

Quick overview

As investors processed a barrage of information regarding the company’s fourth-quarter earnings and an unexpected disclosure regarding its Bitcoin holdings, GameStop Corp. (NYSE: GME) finished Thursday at $22.56, down 2.25% on the day.

GameStop Has Had a Profitable Year, But Revenue Concerns Persist

In terms of profitability, GameStop concluded its fiscal year 2026. On trailing revenue of $3.63 billion, the company reported full-year net income of $418.4 million, resulting in a net profit margin of 11.5%, a significant increase over the 3.4% margin it reported the previous year. Analysts monitoring the company’s continuous transformation took notice of the 220.5% year-over-year surge in earnings.

With an adjusted EPS of $0.49 compared to a consensus forecast of $0.37, fourth-quarter revenue of $1.1 billion exceeded earnings expectations. But compared to the same period last year, the quarter’s sales dropped by about 14%, and it fell well short of analyst estimates.

The projected release of Grand Theft Auto VI in the fourth quarter of 2026 was noted by Baird as a possible trigger for the retailer. Baird revised its financial model to reflect the results and continued to cover the earnings report. However, the company voiced doubts about GameStop’s capacity to maintain year-over-year growth in core video game software sales, a market that has long been under structural strain.

GameStop’s Bitcoin Revelation

GameStop’s annual 10-K filing with the Securities and Exchange Commission, which revealed the company’s Bitcoin BTC/USD holdings, was arguably the most talked-about revelation this week.

On-chain researchers had earlier this year noted that GameStop had moved all 4,710 of its Bitcoin holdings to Coinbase Prime, raising the possibility that the corporation was getting out of the cryptocurrency market. Those rumors were dispelled by the SEC filing. As part of a covered-call strategy, GameStop disclosed that it placed 4,709 of those Bitcoins, worth around $325 million, as collateral on Coinbase Credit.

GameStop sold short-dated call options with strike prices ranging from $105,000 to $110,000 that were scheduled to expire this Friday as part of the agreement. If the options are not exercised, the business keeps its Bitcoin and receives option premiums. A $2.3 million unrealized gain and a $700,000 liability associated with the position were disclosed in the report; some contracts had already expired in January without being executed.

GameStop pointed out that although the collateral arrangement altered the assets’ accounting classification—the coins are now carried as a “digital asset receivable” instead of being directly held—its economic exposure is still comparable to absolute possession.

Only one Bitcoin is currently directly held by the company. As of January 31, it also reported an unrealized loss of $59.7 million on its pledged Bitcoin, which is indicative of a wider slump in the price of Bitcoin, which has fallen by almost 45% from its peak.

After CEO Ryan Cohen met with MicroStrategy chair Michael Saylor in early 2025 to discuss cryptocurrency treasury strategies, GameStop’s Bitcoin strategy was introduced.

GameStop (GME) Stock Outlook and Valuation Debate

The financial situation of GameStop is still a topic of discussion. The company is trading at a trailing price-to-earnings ratio of 24.2x, which is higher than the peer average of 16.5x and the specialty retail sector average of 18.8x. Bears contend that this premium is difficult to defend in light of the firm’s questionable future growth. Bulls, on the other hand, cite a discounted cash flow valuation model that indicates the company is trading at an 86.7% discount to its estimated fair value of $169.96 per share.

Baird pointed out that the company’s remarkably solid balance sheet, which has a current ratio of 15.3 and more cash than debt, serves as a significant buffer. He also pointed out that management seems to be concentrating on capital allocation through Bitcoin purchases and possible strategic acquisitions.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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