GameStop earnings preview: eBay gains set to mask a shrinking core business

GameStop reports second-quarter fiscal 2026 results after the market closes on Tuesday.

In a preliminary results press release on August 31, the company said it expects net sales of $780 million to $800 million for the quarter ended August 1, down sharply from $972.2 million a year earlier.

GameStop attributed the decline to a tough comparison against last year’s Nintendo Switch 2 launch, planned store closures, and the divestiture of its France operations.

The same release flagged operating income of $150 million to $170 million and net income of $290 million to $310 million, both well above the prior year.

Investment gains are doing the heavy lifting

Despite falling sales, GameStop expects operating income of $150 million to $170 million, more than double the $66.4 million posted a year ago, and net income of $290 million to $310 million versus $168.6 million last year.

The jump is largely financial engineering rather than retail strength.

GameStop converted its eBay derivative position into a direct equity stake during the quarter, and now holds roughly 43.4 million eBay shares worth close to $4.95 billion.

That stake generated about $238 million in net gains, partly offset by a roughly $75 million loss on digital assets and related receivables.

Wall Street’s consensus EPS of $0.27 already reflects most of this.

The convertible note overhang just got smaller

A day before the preliminary results, GameStop also amended its $1.4 billion convertible note exchange, first announced in early August.

Instead of an open-ended, share-price-linked stock swap tied to a 35-day trading window, the company fixed the terms: noteholders received about 55.5 million shares plus $358.4 million in cash, capping further dilution.

The exchange closed around September 3, leaving roughly $2.8 billion of convertible notes outstanding.

That certainty on share count matters more than usual right now, given GameStop’s proposed acquisition of eBay at $125 a share, payable in cash and stock, which will likely need further equity issuance down the line.

What Wall Street is expecting

Ahead of the print, analysts have penciled in adjusted earnings per share of $0.27 on revenue of roughly $756.85 million, according to estimates tracked by TipRanks and other Street-facing platforms.

Both figures sit inside the ranges GameStop itself flagged in its preliminary release, which is why analysts widely expect Tuesday’s print to confirm rather than surprise.

The bigger swing factor, in their view, is management’s forward commentary rather than the historical numbers.

GME shares closed at $19.16 on Friday, just above their 52-week low of $17.79, and have traded a roughly flat-to-down path over the past week.

The options market is pricing a swing of around 9% in either direction post-earnings, well above the stock’s 6.6% average move over the past four quarters.