GameStop posts record Q1 profit, unveils $2B buyback

GameStop reported first-quarter net income of $389.6 million, or $0.66 per share, compared with $44.8 million, or $0.09 per share, a year earlier. Revenue rose 14% to $835.3 million from $732.4 million. The stock climbed 6.12% to $22.21 on Wednesday. The board approved a $2 billion share repurchase program that will run through June 2, 2029, replacing a prior authorization from March 2019. The company noted that buybacks typically reduce shares outstanding and can support earnings per share over time.

On an adjusted basis, excluding impairments, gains on digital assets and related receivables, unrealized gains on derivative assets and certain other items, net income rose to $179.3 million, or $0.30 per share, from $73 million a year earlier. Operating income reached $143.3 million, the company’s strongest first-quarter operating result on record.

The company attributed the year-over-year sales increase mainly to strength in its collectibles segment, while physical video game sales have softened across the industry. The results reflect ongoing efforts to expand beyond traditional video game retailing.

The earnings were reported after GameStop proposed a takeover of eBay in a deal valued at about $56 billion. eBay’s board and its independent advisers rejected the offer, citing concerns about financing, leverage and the leadership structure of a combined company. After the rejection, GameStop disclosed it had increased its stake in eBay to 6.55% of outstanding shares, up from roughly 5%, and requested shareholder approval to raise its authorized share count and to grant a 100% performance-based option award for Chief Executive Officer Ryan Cohen.

The profit report and the $2 billion repurchase authorization coincided with the share price gain and refocused attention on the company’s financial results and capital allocation plans.