Popular meme stock GameStop (GME) is once again grabbing investor attention after the company delivered a strong second-quarter earnings report on Sept. 8, reigniting enthusiasm around the video game retailer. That’s notable given GameStop has been fighting a shrinking core business, with sales declining in each of the past four fiscal years. According to the latest earnings report, collectibles have now emerged as GameStop’s dominant revenue line, while gross margin nearly doubled from the prior year.
Management also raised its fiscal 2026 adjusted EBITDA guidance, adding further fuel to the bullish sentiment. But the earnings report wasn’t the only thing that caught investors’ eyes. On the same day GameStop released its results, one of its directors made a sizable bet on the company’s stock. Director Lawrence Cheng purchased 55,000 Class A common shares worth around $1.03 million. In fact, Cheng wasn’t the only insider buying.
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After his purchase, GameStop director James Grube bought 10,255 shares for about $196,000, bringing his direct stake to 39,694 shares. Insider buying is often viewed as a bullish signal, particularly when directors are putting significant amounts of their own money into the stock. So, with two GameStop directors buying shares immediately after the earnings release, should investors take the hint and buy GME now? Let’s take a closer look.
About GameStop Stock
Founded in 1984, Texas-based GameStop is a specialty retailer best known for its wide range of video games, gaming consoles, accessories, collectibles, and other entertainment products. The company operates through a combination of physical stores and an online platform, while its buy-sell-trade model lets customers exchange games, consoles, and accessories for cash or store credit. Over the years, GameStop steadily expanded its footprint through acquisitions, eventually growing into one of the world’s largest video-game retailers.
By the late 2010s, the company operated thousands of stores across multiple countries, selling both new and pre-owned games and hardware. But GameStop’s biggest transformation had little to do with its stores. In 2021, the company shot to global fame during the historic meme-stock frenzy, as retail investors piled into GME and turned the struggling retailer into an unlikely Wall Street phenomenon.
In January 2021, retail investors sent GameStop shares soaring more than 1,600%, fueled by calls on Reddit’s WallStreetBets message board to pile into the beleaguered stock, along with the growing use of nascent digital investment platforms to place trades. But, as is often the case with meme-stock rallies, the frenzy proved difficult to sustain. After hitting a record $120.75 in January 2021, GameStop has since given back 83.5% of those gains.
Fast-forward to today, and GameStop has a market capitalization of about $9.1 billion. Shares have climbed roughly 5.7% over the past five days, helped by a strong quarterly performance and insider purchases. However, that recent momentum hasn’t been enough to push the stock into positive territory for the year. GME remains marginally down year-to-date (YTD), significantly lagging the broader S&P 500 Index ($SPX) , which has gained about 11.6% over the same period.
www.barchart.com GameStop’s Q2 Earnings Snapshot
GameStop released its financial results for the fiscal 2026 second quarter on Sept. 8, highlighting a sharp contrast between shrinking traditional retail revenue and surging bottom-line profitability. The video game retailer reported net sales of $790.2 million for the quarter, down 19% from $972.2 million in the same period last year. The decline was largely driven by planned store closures, the divestiture of GameStop’s operations in France, and the prior-year launch of Nintendo Switch 2.
Yet despite the steep drop in sales, GameStop’s profitability surged. Net income jumped to $298.7 million, more than doubling from the year-ago period. On a per-share basis, the company reported adjusted earnings of $0.27, up from $0.25 in the same quarter last year. However, this sharp improvement in profitability was driven heavily by non-operating financial maneuvers, most notably net gains from converting derivative positions into a direct equity investment in eBay.
The strength wasn’t limited to the bottom line. Operating income soared 141.1% year over year to $160.2 million, marking the highest second-quarter operating income in GameStop’s history. Adjusted EBITDA also more than doubled, reaching $174 million in the second quarter, compared with $75.7 million in the prior-year period. Meanwhile, GameStop’s collectibles business emerged as a particularly bright spot.
Sales in the category surged 57% year over year to $356.3 million, making collectibles the company’s largest revenue contributor and accounting for 45.1% of total net sales. GameStop also continues to sit on a sizable financial cushion. As of August 1, 2026, the company had $5.4 billion in cash, cash equivalents, marketable securities, digital assets, and related receivables, along with a $4.9 billion investment in eBay common stock.
And management is becoming more confident about the year ahead. GameStop raised its fiscal 2026 adjusted EBITDA outlook to more than $650 million, up from its previous forecast of over $600 million provided on June 26, 2026.
Final Thoughts on GameStop Stock
GameStop has little to no professional analyst coverage, underscoring just how much the stock’s story has been shaped by internet-driven investor sentiment rather than traditional fundamentals. Yet its latest results give bulls something real to point to. Despite continued weakness in its core retail business, surging profitability, booming collectibles sales, a hefty cash pile, and a higher EBITDA outlook suggest GameStop may be slowly rewriting its story.
And now, a fresh round of insider buying is adding even more intrigue to the turnaround. Cheng’s $1.03 million purchase, followed by Grube’s $196,000 buy, shows that both directors are willing to put real money behind GameStop after its latest results. That’s certainly a vote of confidence, but not a guarantee that GME is a compelling investment candidate. For investors, the real test now is whether GameStop can turn this improved profitability into a sustainable growth story. Until then, the stock remains an intriguing but highly speculative bet.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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