GameStop Q2: Sales Fall, Earnings Boosted by eBay Stake

GameStop issued preliminary results for the quarter on Monday, projecting net sales of $780 million to $800 million, down from $972 million in the prior-year period. The company expects net income of $290 million to $310 million for Q2.

The anticipated increase in net income is driven mainly by converting derivative holdings into an equity stake of 43.4 million eBay shares valued at about $4.947 billion. The conversion produced roughly $238 million in net gains.

Those gains were partially offset by a reported $75 million loss on digital asset holdings.

After the equity conversion, cash, cash equivalents and marketable securities stood at about $5.06 billion, down from $8.694 billion a year earlier, according to the preliminary filing.

The filing does not show an improvement in retail sales; net sales are projected to decline year over year, reflecting continued weakness in the company’s merchandise business.

Shares rose on the day of the announcement but remained more than 30% below their year-to-date high. At the time of the filing, the stock had coverage from one analyst, who maintained a Hold rating and a $13.50 price target.

GameStop plans to release its full second-quarter results on Sept. 8.

The preliminary figures show the quarter’s reported earnings were produced mainly through balance-sheet transactions rather than growth in retail operations.