GameStop's Record Quarter
GameStop (GME) posted a record-breaking quarter, its biggest Q2 number since 2002. Operating income for the period reached its highest level since 2002, and net income rose. The stock barely moved on the report, down about 90 basis points.
Net sales fell nearly 20% (about 19%). Video games and pre-owned refurbished hardware both declined. Collectibles offset that drop, up 57% year over year.
Investment gains carried much of the result. GameStop booked about a $238 million gain from its eBay (EBAY) investment. The company increasingly looks like two different businesses under one ticker: a leaner retailer and a multi-billion dollar investment arm.
The eBay Bid Is Not Dead
Back in May, GameStop weighed an unsolicited bid of about $56 billion for eBay. eBay said no right away. At first the idea sounded strange - a much smaller video game retailer trying to buy a large online marketplace.
The strategic logic holds up. GameStop brings physical stores and physical infrastructure; eBay brings a digital marketplace. The link between them is collectibles.
Even after the rejection, Ryan Cohen said he is not walking away and kept buying. Four months ago, in May, GameStop held about a 5% stake in eBay. It now holds 10%, double the earlier position. I do not think this eBay story is over - it may still have another chapter.
A Ryan Cohen Story
This is becoming more and more a Ryan Cohen story. He built Chewy (CHWY), which makes it hard to discount him even if some find him polarizing or confusing. In eBay he saw massive savings he could deliver.
GameStop has been around and public for a long time, but it avoided the Blockbuster route of dying off. Under Cohen's leadership it is running as two businesses. On the retail side it is closing stores and exiting markets such as France, going for profitability over scale. In parallel, Cohen is running a multi-billion dollar investment arm and calling the shots himself. His decisions are proving viable.
Two Businesses, Billions in Capital
The stores still matter because Cohen is making them leaner and pivoting toward collectibles. GameStop now holds billions of dollars in capital that Cohen can deploy into other investments, acquisitions, and buybacks, while actively managing the capital structure.
GameStop is unlike other stocks - a mix of meme stock energy, a leadership team, a dying core business, and pivots and investments layered on top. That mix is what makes it interesting to watch right now, and the eBay story may still have a chapter left.
