GameStop (NYSE:GME) just flipped the script, delivering an unexpected Q3 profit despite a tough 20% drop in year-over-year sales. The gaming retailer reported $17.4 million in net income, a sharp pivot from last year’s $3.1 million loss. How did they do it? Cost-cutting and operational discipline. The revenue miss may raise eyebrows, but this profitability suggests GameStop’s new strategy is starting to click.
The market is loving it. GameStop shares popped nearly 9% this morning, building on a strong 67% year-to-date run. Investors are eyeing a potential breakout, with technical support near $26 holding firm since late November. Add to that the 31.87 million shorted shares7.8% of the floatand you’ve got a recipe for a short-squeeze rally if momentum holds. This could be one of those rare moments when GameStop reclaims its narrative from the skeptics.
GameStop’s cash position is another twist in the tale. The company raised $400 million this quarter via an at-the-market equity offering, bolstering its war chest to $4.6 billion. That’s serious firepower for whatever’s nextwhether it’s tech upgrades, acquisitions, or shoring up its supply chain. For investors, the message is clear: this isn’t just a meme stock anymoreit’s a company in transformation, and the next chapter could be even more interesting.
This article first appeared on GuruFocus.