GameStop closed on Friday 9 October at $26.56, up 5.1% on the day. On Friday 28 August it closed at $17.87. That is a 48.6% rise in six weeks, and it is why "gme" is back in search boxes, including on this site's ticker page.
There was no single headline behind the move. It is the sum of four things: the most profitable second quarter in the company's history, a run of open-market purchases by chief executive Ryan Cohen, a shrinking short position, and a set of warrants with a $32 exercise price that expire at the end of this month. The eBay pursuit, which I covered when eBay rejected the $56 billion bid in May, now sits on the balance sheet as a 9.8% stake.
The move, in closing prices
The climb began after results: on Wednesday 9 September, the first session after the second-quarter report, the stock rose 5.3% to $19.89. It crossed $24 on 22 September, fell 6.5% to $23.39 on 25 September, then held between $23.76 and $25.28 until the jump on 9 October. Measured from the 8 September close of $18.89, the shares are up 40.6%.
The 16.3 million shares traded on 9 October made it the busiest session since 3 August, when the stock fell 12.25% on 41.7 million shares after GameStop announced it would swap $1.4 billion of convertible notes for stock.
Second quarter: smaller, but more profitable
GameStop reported the quarter to 1 August on 8 September.
- Net sales: $790.2 million, down 18.7% from $972.2 million. The company blamed last year's Nintendo Switch 2 launch, planned store closures and the sale of its French business.
- Collectibles: $356.3 million, up 57%, now 45.1% of sales. Video games fell to $263.2 million from $494.6 million; pre-owned and refurbished to $170.7 million from $250.0 million.
- Operating income: $160.2 million against $66.4 million, the highest for any second quarter in GameStop's history. SG&A fell to $187.1 million from $218.8 million.
- Net income: $298.7 million, or $0.51 a diluted share, against $168.6 million.
- Adjusted EBITDA: $174.0 million against $75.7 million. Full-year guidance was raised to more than $650 million from more than $600 million.
Net income includes about $238 million of net gains on the eBay position, partly offset by a $75.0 million loss on bitcoin. Adjusted net income was $161.1 million, or $0.27 a share, against $0.25 a year earlier. Free cash flow fell to $60.7 million from $113.3 million.
Cash, bitcoin and the eBay stake
On 1 August GameStop held $4.85 billion in cash and equivalents, $206.0 million in marketable securities and $294.1 million in digital assets and related receivables: $5.35 billion in total. A year earlier cash alone was $8.69 billion. Most of the difference went into eBay: according to the 10-Q, GameStop built exposure to 39,046,658 eBay shares through paired put and call options, exercised them on 15 July for $3.96 billion (an average of $101.30 a share), and bought another 4,343,725 shares in the market for $472.3 million. It now owns 43,390,383 eBay shares, 9.8% of the company, for about $4.43 billion in cash, roughly $102 a share. eBay closed on 9 October at $112.19, which values the stake at about $4.87 billion, some $440 million above cost.
The stake was marked at eBay's 31 July close of $114.01. If eBay ends October where it is now, the quarter will carry an unrealised loss of roughly $79 million on it.
The bitcoin is no longer simply bitcoin. GameStop bought 4,710 coins for $500 million in 2025, then pledged 4,709 of them to Coinbase as collateral for a covered-call programme. Because Coinbase can re-pledge or sell them, GameStop now records a receivable, worth $294.1 million on 1 August, about 41% below cost.
The August debt swap retired $400 million of 2030 notes and $1.0 billion of 2032 notes for about 55.5 million shares and $358.4 million in cash. Long-term debt fell to about $2.8 billion; the share count rose to 504,500,990 on 3 September.
eBay: where the bid stands
There is no new offer. The last proposal was the $125-a-share cash-and-stock bid of 3 May. eBay's board criticised the financing, the leverage of the combined group and Cohen's own incentives; Cohen has since withdrawn a bonus plan the board objected to. In a Financial Times interview on 19 July he said: "I want to own eBay — that's all I've been thinking about," and added that eBay's board may "wait till the annual meeting."
The last deal communication GameStop filed with the SEC is dated 20 July, and the 10-Q still lists the "proposed acquisition of eBay" as a risk. At $112.19, eBay trades 10% below the $125 offer.
Cohen is buying, short sellers are leaving
Form 4 filings show Cohen bought 1,000,000 shares on 10 September at an average $20.38, 1,150,680 on 21 September at $22.94, 450,000 on 29 September at about $23.47 and 700,000 on 2 October at $24.41. That is 3.3 million shares for about $74.4 million, at an average of $22.55. He now holds 41,648,522 shares directly, about 8.3% of shares outstanding. Director Nat Turner bought 10,462 shares on 1 October.
Short interest went the other way. Stockanalysis.com shows 42.67 million shares sold short, 9.25% of the float, down from 56.99 million a month earlier, with 4.3 days to cover. In September 2025 MarketWatch counted about 67.8 million, 16.6% of the float. The rally has come with shorts closing, not trapped.
The $32 line: warrants expire on 30 October
In October 2025 GameStop gave shareholders one warrant for every ten shares. Each lets the holder buy one share for $32 in cash, and they expire at 5 p.m. New York time on Friday 30 October. Up to 59,153,963 shares are registered for them; only 2,534 had been exercised by 1 August.
From $26.56 the stock needs to rise 20.5% to reach the exercise price. Above $32, full exercise would bring in about $1.89 billion of cash and add about 59 million shares, 11.7% of the current count. Below it, the warrants expire worthless and nothing changes. A dated deadline at a round-number price explains part of the attention.
Valuation against cash
At $26.56 GameStop is worth $13.40 billion. Take the $5.35 billion of cash, securities and bitcoin receivable on 1 August, less the $358.4 million paid in the swap, and add the eBay stake at $4.87 billion. Subtract $2.8 billion of convertible debt. That leaves about $7.06 billion, or $14.00 a share.
So the market is paying about $12.56 a share, or $6.3 billion, for the operating business: roughly 9.7 times the adjusted EBITDA guidance of more than $650 million. Trailing P/E is 17.4 (stockanalysis.com). These are 1 August balances, before third-quarter cash flow.
In analyst Ruslan Averin's view, about half of the share price is a portfolio of cash, eBay stock and a bitcoin claim, and the other half is a video-game retailer turning into a collectibles business. The rally has priced that second half at a multiple that requires collectibles to keep growing at double-digit rates.
Risks
- eBay concentration. Every $10 move in eBay changes the stake by about $434 million, or $0.86 per GameStop share, through net income.
- Shrinking core. Video game sales fell 46.8% year on year in the quarter.
- Dilution. 55.5 million new shares in September, up to 59 million more if the warrants are exercised, and $2.8 billion of convertible notes still outstanding.
- Bitcoin. A receivable from Coinbase: price and counterparty risk.
- The bid itself. A revived offer would need financing eBay has already called a problem.
I would watch three dates: 30 October, when the warrants expire and eBay's last close of GameStop's fiscal third quarter sets the stake's mark; the $2.0 billion buyback authorised in the second quarter, none of which had been used by 1 August; and the third-quarter report, which last year came in early December.
Related: GameStop's $56 billion eBay bid and its rejection, bitcoin at $65,000 and the August bear market and what the June volatility spike taught options traders.