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BTC GameStop hits record high second-quarter operating profit, facing unrealized losses on Bitcoin positions
In the 13 weeks ended August 1, GameStop reported its highest second-quarter operating profit ever, reaching $160.2 million, according to an earnings announcement filed with the U.S. Securities and Exchange Commission. The same filing showed that the company reported a loss of $75 million on digital assets and related receivables, compared with a gain of $28.6 million in the quarter last year.
This loss is an unrealized loss. Throughout the quarter, GameStop did not buy or sell any digital assets. Therefore, in the statement of cash flows, this $75 million is added back as a non-cash item. It reflects a decline in the assets the company continues to hold due to revaluation of market value. According to The Block, these positions include approximately 4,709 bitcoins that have been pledged to Coinbase Credit as collateral for the option plan. The value of those positions on the balance sheet was $294.1 million, down from $528.6 million at the end of the previous fiscal year.
Revenue growth and sales decline coexist
Operating profit increased to US$160.2 million from US$66.4 million in the same period last year due to a sharp jump in gross profit margin from 29.1% to 43.7%. Collectibles sales increased 57% year-on-year to US$356.3 million, and now account for 45.1% of net sales. At the same time, sales, general and administrative expenses (SG&A) fell from $218.8 million to $187.1 million due to store closures and the divestiture of the French business.
However, net sales still fell 18.7% year-on-year, from $972.2 million to $790.2 million. The company attributed this decline mainly to the release of Nintendo Switch 2 in the same period last year, as well as planned store closures and the divestiture of its French business.
Net income increased to $298.7 million from $168.6 million in the same period last year. However, the figure was driven by two non-core retail business gains: $166.3 million in derivative assets and $72.1 million in unrealized gains from the company's equity investment in eBay.
GameStop begins options on its bitcoin
Documents show that the company's actions are far more than just holding assets. According to earnings announcements, GameStop generated $18.2 million in revenue from selling digital asset options in the first half of the fiscal year and recognized options gains of $16.1 million in the second quarter.
GameStop raised its full-year adjusted EBITDA outlook to more than $650 million, above the target of more than $600 million set in June this year. At the end of the quarter, the company had a total of $5.4 billion in cash, marketable securities and digital assets, plus approximately $4.9 billion worth of eBay equity.
Background review: Strategic transformation
GameStop began building its Bitcoin positions in March 2025, when it announced a US$1.5 billion convertible note issuance, with the proceeds available to purchase Bitcoin. This strategy follows the Treasury Management Manual pioneered by former MicroStrategy (now renamed Strategy), which holds more than 845,000 BTC.
