GameStop Corp. Class A (GME.US) ventures into the bitcoin field but suffers a stock price decline. Q1 revenue falls short of expectations, dragging down performance.

Despite achieving profitability for the fourth consecutive quarter, GameStop Corp. Class A (GME.US) saw its stock price drop over 6% in after-hours trading on Tuesday due to lower-than-expected revenue in the first quarter. This was attributed to consumers increasingly preferring digital downloads over physical store purchases. According to the financial report, GameStop Corp. Class A's first-quarter revenue declined by 17% year-on-year, from $8.818 billion in the same period last year to $7.324 billion, falling below analysts' expectations of $7.5 billion. The Texas-based company, known for the rollercoaster ride of its stock price driven by the Reddit forum in 2021, is now facing the challenges of the rapidly changing game industry as consumer preferences shift towards digital downloads, game streaming, and online shopping. Although GameStop Corp. Class A has expanded its e-commerce platform to include digital downloads and online merchandise sales, it has yet to fully capitalize on this transformation opportunity. During the reporting period, revenue from the hardware and accessories division, which includes sales of new and used electronic games, decreased by approximately 32%. After closing nearly 600 stores in the United States in 2024, the company announced plans to close a "significant number" of stores this year, indicating that its retail business continues to struggle despite reform efforts. Through cost-cutting measures, the company reported a net profit of $44.8 million (9 cents per share) in the first quarter, compared to a net loss of $32.3 million (11 cents per share) in the same period last year, marking the company's fourth consecutive quarter of profitability. Adjusted earnings per share reached 17 cents, significantly exceeding analysts' expectations of 8 cents. In early May, GameStop Corp. Class A sold its Canadian subsidiary, Electronics Boutique Canada, which operated its stores and e-commerce business in Canada. The company expects to complete the sale of its French operations within the 2025 fiscal year. The company reported an operating loss of $10.8 million for the quarter, including $35.5 million in impairment charges related to international restructuring. It is worth noting that GameStop Corp. Class A revealed that it had used cash to purchase 4,710 bitcoins between May 3 and June 10. Earlier this year, the company's board unanimously approved an updated investment policy, similar to that of the software company Strategy (MSTR.US), to include bitcoins in its treasury assets. As of the close of trading on Tuesday, GameStop Corp. Class A's stock price had fallen by 3.8% year-to-date, while the S&P 500 index had risen by 2.7% over the same period.