GameStop will ace the financial crisis wave with its strategic Bitcoin investment and cash reserves

GameStop Corp. (NYSE: GME) — FY2025 Annual Review

The Transformation Is Complete. Now Comes the Deployment.

Price Target: $220 | Current Price: ~$23 | Date: April 2, 2026

Executive Summary

GameStop's fiscal year 2025 (ended January 31, 2026) marks the definitive inflection point. The company posted $418.4 million in net income — a 219% increase over the prior year's $131.3 million — on $3.63 billion in revenue. Operating income swung from a loss of $26.2 million to a profit of $232.1 million. Free cash flow hit $597.3 million. The cash pile reached $9.01 billion. SG&A expenses dropped another 19.5% to $910.2 million.

These are not the numbers of a struggling retailer. These are the numbers of a company that has completed a surgical transformation under Ryan Cohen's leadership and is now sitting on a loaded balance sheet, waiting to deploy capital into a transformative acquisition.

I maintain a $220 price target, representing approximately $99 billion in market capitalization — a figure that aligns precisely with the top tranche of Cohen's CEO Performance Award, a 100% performance-based stock option package that rewards him only if shareholders see the stock reach levels representing a 10x return from current prices. Cohen receives zero salary, zero cash bonuses, and zero time-vested equity. He gets paid only if shareholders get paid first.

The Nine-Quarter Transformation: Let the Numbers Speak

The trajectory from Q4 FY23 through Q4 FY25 tells a story that no narrative can obscure. Revenue declined from $1.79 billion to $1.10 billion on a comparable Q4 basis — a deliberate contraction reflecting 727 U.S. store closures in FY2025 alone, plus the complete exit from Canada, Germany, Italy, New Zealand, and pending exit from France. But every other metric moved in the opposite direction.

Net income swung from a $32.3 million loss in Q1 FY24 to consistent profitability across every quarter of FY2025: $44.8 million in Q1, $168.6 million in Q2, $77.1 million in Q3, and $127.9 million in Q4. The cash position marched from $1.0 billion to $9.01 billion across the same period — a 9x increase. SG&A expenses dropped from $295.1 million per quarter to a range of $219–242 million, a structural reduction that persists regardless of revenue fluctuations.

Full-year FY2025 gross margin expanded to 33.0% from 29.1%, driven by the dramatic shift toward higher-margin collectibles. Adjusted EBITDA reached $345.4 million, compared to $36.1 million in the prior year — an 857% improvement.

The company did not hold a single earnings call during FY2025. Cohen let the numbers do the talking.

Bottom Line Over Top Line: The Only Metric That Matters

Wall Street's bearish thesis on GameStop has always centered on one thing: declining revenue. Every quarter, without fail, the same headlines appear day after day, week after week. Revenue fell. Sales are shrinking. The business is dying.

This fixation on top-line revenue is not just analytically lazy — at this stage, it is suspicious. Not a single Wall Street analyst covers GameStop. Zero. The most famous contrarian investor alive, Michael Burry, has made GME a 13% position in his portfolio. Ryan Cohen personally bought 1 million shares in January 2026. Directors Alain Attal and Lawrence Cheng bought alongside him in the same week. And yet the institutional coverage vacuum persists.

The question deserves to be asked directly: why does Wall Street refuse to cover a company with $9 billion in cash, $418 million in net income, $597 million in free cash flow, and zero coupon debt? The absence of coverage is itself a signal. When no analyst publishes a price target, there is no institutional framework to guide a re-rating - it is how their system is designed. Retail investors are left navigating in the dark while legacy media amplifies the revenue narrative quarter after quarter. Who benefits from that vacuum? Not the shareholders.

Let us be specific about why top-line revenue is the wrong metric.

WeWork grew revenue from $886 million in 2017 to $3.4 billion in 2020. During that same period, it accumulated roughly $16 billion in lease obligations and filed for Chapter 11 bankruptcy in November 2023 with $18.65 billion in total liabilities against $15.06 billion in assets. Revenue growth without profitability is just burning cash with a marketing budget.

Peloton grew revenue from approximately $915 million in FY2019 to $4.0 billion in FY2021. The stock hit $171.09 in January 2021. By May 2024, the stock traded at $2.70 — its all-time low. Revenue was a vanity metric that masked a structurally unprofitable business model.

Carvana grew revenue to $13.6 billion in 2022 while simultaneously approaching insolvency. It took a brutal debt restructuring and near-death experience before the company refocused on profitability — the exact playbook GameStop executed proactively, without the near-death part.

Revenue growth without profit discipline is nothing more than organized cash destruction. GameStop chose the opposite path: shrink intelligently, cut ruthlessly, and accumulate capital for deployment. The result speaks for itself. In FY2023, net income was $6.7 million. In FY2024, it was $131.3 million. In FY2025, it was $418.4 million. That is a 6,143% improvement in two years.

The Collectibles Engine: 47.7% Growth and a New Revenue Pillar

The most significant operational story in FY2025 is the collectibles segment. Revenue from collectibles — apparel, toys, trading cards, grading services — surged 47.7% to $1.06 billion, growing from 18.8% to 29.2% of total revenue. In Q4 alone, collectibles hit $365 million, representing 33.1% of quarterly sales.

This is not incremental. This is a structural transformation of the business mix. Collectibles carry significantly higher margins than hardware or software, and they are not subject to the same digital distribution headwinds. Nobody downloads a graded Pokemon card.

The 10-K reveals a new initiative that received almost no media attention: Power Packs, a digital trading platform launched in partnership with Collectors Holdings (parent of PSA, the Professional Sports Authenticator). Power Packs lets collectors purchase graded PSA trading cards that are stored in the PSA vault, with the ability to instantly sell back, trade, ship, or hold. Early beta results are described as "promising." This is GameStop entering fintech-adjacent territory through the collectibles channel.

Meanwhile, hardware and accessories declined 12.3% to $1.84 billion and software declined 27.5% to $729 million. The software decline reflects the industry-wide shift to digital downloads — a structural headwind that GameStop has acknowledged and is actively navigating by reducing exposure. However, the launch of the Nintendo Switch 2 in June 2025 creates a new hardware cycle that should provide a tailwind for FY2026.

Missed point about Revenues

A critical detail buried in the segment data: while total revenue fell 5.1% to $3.63 billion, U.S. revenue actually grew 3.6% to $2.67 billion, and Australia grew 22.2% to $494.7 million. The entire consolidated revenue decline is attributable to exited markets — Canada (-81.3%) and Europe (-32.7%). Strip out the divestitures, and the core business is growing.

The $9 Billion Balance Sheet: A Weapon, Not a Savings Account

As of January 31, 2026:

• Cash and cash equivalents: $6,304.7 million
• Marketable securities: $2,709.1 million
• Total liquid assets: $9,013.8 million
• Bitcoin and related receivables: $368.4 million
• Stockholders' equity: $5,444.4 million (highest in company history)
• Long-term debt: $4,164.3 million (entirely zero-coupon convertible notes)
• Shares outstanding: 448,375,157

The cash position of $9.01 billion represents approximately $20.10 per share in liquid assets alone. At a share price of ~$23, investors are paying roughly $3 per share for the entire operating business, the brand, the 2,206 stores, the collectibles platform, the grading services partnership with PSA, and the strategic optionality of a $9 billion war chest.

The $4.2 billion in convertible notes deserves specific attention. These were issued in two tranches: $1.5 billion due 2030 and $2.25 billion due 2032, both at 0.00% interest. GameStop pays nothing to service this debt. Not a cent in coupon payments. The market accepted zero return because the conversion premium — the right to convert into equity at a price above the current market — was sufficient incentive.

Now contrast this with what is happening elsewhere. OpenAI, arguably the most hyped company on the planet, is reportedly offering private equity firms a guaranteed minimum return of 17.50% just to attract capital — while simultaneously burning an estimated $14 billion annually and requiring hundreds of billions more in infrastructure financing. OpenAI's own data center partners have accumulated approximately $100 billion in debt, with Oracle's bonds trading at credit default swap spreads not seen since 2009.

GameStop raised $4.2 billion for free. OpenAI has to guarantee 17.50% returns to attract sophisticated investors. WeWork paid 7.88% on junk bonds before going bankrupt. This tells you everything you need to know about which balance sheet the market actually trusts, regardless of what the Wall st headlines say.

The interest income alone generated $271.5 million in FY2025 (net of $42.2 million in non-cash warrant expense). GameStop is earning more from its cash pile than most mid-cap companies earn in operating profit.

Bitcoin: A Measured Bet, Not a YOLO

GameStop purchased 4,710 Bitcoin for $500 million during Q2 FY2025. By the end of the fiscal year, the BTC position was valued at $368.4 million, reflecting a $131.6 million total loss on digital assets and related receivables.

This sounds painful, but context matters. The $500 million investment represents 5.6% of the $9 billion cash position. GameStop did not lever up to buy Bitcoin. It did not bet the balance sheet. It allocated a measured portion of its treasury to a speculative asset with asymmetric upside — and absorbed the downside without any material impact on operations. The $131.6 million loss, while real, is roughly equivalent to seven weeks of interest income.

In Q4, GameStop entered a covered call strategy with Coinbase Credit, pledging 4,709 BTC as collateral. The counterparty has rehypothecation rights — meaning Coinbase can re-use the pledged Bitcoin. GameStop derecognized the BTC as an intangible asset and reclassified it as a digital asset receivable. This is a sophisticated income-generating strategy, not a simple buy-and-hold — though it does introduce counterparty risk that investors should monitor.

Burry's own assessment is instructive: "I do not know about this Bitcoin thing, but I cannot argue with what has been done so far."

Ryan Cohen: Alignment Without Precedent

On January 6, 2026, GameStop disclosed a CEO Performance Award to Ryan Cohen consisting entirely of performance-based nonqualified stock options on approximately 171.5 million shares at a fixed exercise price of $20.66 per share. The award is subject to stockholder approval at the upcoming annual meeting.

This is not a share grant. Cohen does not receive a single share for free. The options become exercisable only upon achieving nine cumulative milestones tied to market capitalization reaching $100 billion and cumulative performance EBITDA reaching $10 billion. If and when those milestones are met, Cohen earns the right to buy shares at $20.66 — meaning he must deploy his own capital to exercise. If the stock is at $220 when a tranche becomes exercisable, Cohen pays $20.66 per share and the difference represents his reward for delivering that value. The exercise proceeds flow back into GameStop's treasury, adding cash to the balance sheet. If the milestones are never met, the options expire worthless and Cohen receives nothing.

Cohen receives no salary. No bonuses. No time-vested equity. Zero compensation unless shareholders see the stock reach levels that would represent a 10x return from current prices. Yes, exercised options create dilution — but it is dilution that only occurs in a scenario where every existing shareholder has already made multiples on their investment. The options are worthless at $23. They only matter at $100+ per share. This is the definition of aligned incentives: Cohen gets rich only after shareholders get rich first.

Cohen also personally purchased 1 million shares in January 2026 across two consecutive days: 500,000 shares at $21.12 on January 20, and another 500,000 at $21.60 on January 21 — a total outlay of approximately $21.4 million. This brought his direct ownership to 38,347,842 shares, with total beneficial ownership of approximately 42.1 million shares (~9.3% of the company). In his SEC filing, he stated that CEOs who do not buy their own company's stock with personal funds "should be fired."

Three board members bought alongside him in the same week: director Alain Attal purchased 24,000 shares across two transactions (~$510,000), and director Lawrence Cheng purchased 5,000 shares through Cheng Capital LLC (~$114,000). In total, insiders committed nearly $22 million in open-market purchases within a four-day window in January 2026.

Retail Shareholders: Conviction in Registered Form

The insider buying is mirrored by an equally committed retail shareholder base. As of March 18, 2026, approximately 66.2 million shares (15% of outstanding!) were held by registered holders with Computershare, GameStop's transfer agent. The vast majority of these are directly registered shares — removed from the DTC system and held in individual investors' names rather than in street name through brokers. This structural commitment limits the shares available for lending and short-selling, providing a stability floor during periods of volatility.

The 177,522 record holders represent one of the largest directly registered shareholder bases of any public company. These are not passive index fund allocations. Each registration requires the shareholder to actively request the transfer from their broker — a deliberate, manual act of long-term conviction. When 15% of a company's shares are locked away in registered form by individual investors who went out of their way to do it, that is not speculation. That is ownership.

Michael Burry: The Smart Money Has Arrived

The man who shorted the housing market before 2008 — and was right when everyone said he was wrong — is now long GameStop. Dr. Michael Burry disclosed on January 26, 2026 via his Substack that he has been accumulating GME shares as a long-term value investment at approximately 1x tangible book value. As of recent communications, GME represents 13% of his portfolio.

Burry's thesis is not about a short squeeze. He explicitly stated: "I am not counting on a short squeeze to realize long-term value. I believe in Ryan, I like the setup, the governance, the strategy as I see it. I am willing to hold long-term."

He described Cohen as "making lemonade out of lemons" — acknowledging the weak retail business while praising the use of the meme phenomenon to build a war chest. Burry drew comparisons to Warren Buffett's early strategy with Berkshire Hathaway, suggesting GameStop could evolve into a holding company supported by its cash position.

In early March 2026, Burry publicly listed potential acquisition targets he believes GameStop should evaluate, and the stock jumped 8% on that news alone. Wall Street analysts may refuse to cover GameStop, but the man who correctly predicted the 2008 crisis is allocating 13% of his capital to it.

The Turnaround Operator Thesis: Not Berkshire — Something Different

There has been considerable speculation that GameStop will become "the next Berkshire Hathaway." I respectfully disagree. I believe Cohen's model is more accurately described as a turnaround acquisition vehicle — a company that identifies bloated, legacy businesses with strong underlying infrastructure, acquires them at reasonable valuations, strips out the embedded incompetence derived from decades of unchallenged organizational drift, and unlocks value through operational discipline.

This is speculative — I do not have inside information. This is based on how I read Cohen's operating philosophy and the 10-K's explicit language about "control transactions and transformational acquisitions."

Consider his track record. Cohen built Chewy from zero to $3.5 billion in revenue and a $3.35 billion acquisition in six years — the largest e-commerce deal in U.S. history at the time. Chewy later IPO'd at about $8.7 billion. At GameStop, he took a company losing $32 million per quarter and turned it into one generating $418 million annually in net income — while closing over 1,000 stores and exiting seven international markets.

Now consider the landscape of potential targets. Companies like eBay, PayPal, or legacy authentication services like PSA have enormous user bases, established payment infrastructure, and brand recognition. They also have bloated cost structures, poor user experience relative to modern standards, and organizational complexity that accumulated over decades of legacy management. They all work, but none of them work efficiently. The fees are high. The interfaces are dated. The synergies between adjacent platforms remain unrealized.

Now imagine someone like Cohen acquiring one or more of these types of businesses. Cut the corporate bloat. Modernize the user experience. Integrate the payment and authentication infrastructure. Cross-sell into GameStop's existing collectibles and grading ecosystem.

The 10-K's own language is remarkably direct: "We view our significant cash and other sources of liquidity as a strategic asset to be deployed into acquisitions and control transactions that offer long-term value." The Investment Committee — Cohen plus two independent directors — has delegated authority to act with speed. The forward-looking statement on acquisitions states they are "actively evaluating opportunities that could require significant capital deployment."

If capital is deployed correctly into this type of turnaround bundle — cleaning the operational inefficiency of legacy platforms while unlocking synergies — the probability of GameStop becoming a 10x or even 20x stock increases meaningfully.

$220 Price Target: The Math

At $220 per share on 448 million shares outstanding, GameStop's market capitalization would be approximately $98.6 billion. This aligns with the top tranche of Cohen's performance award — the point at which his options become fully exercisable and he can purchase shares at $20.66, with exercise proceeds flowing back into the company treasury.

The supporting framework:

Floor Value: Cash and liquid securities of $9.01 billion plus Bitcoin holdings of $368 million equals approximately $20.93 per share. At ~$23, you are paying less than $3 per share for the operating business. Burry is buying at essentially 1x tangible book value.

Operating Earnings Power: FY2025 adjusted net income was $647.4 million, or $1.18 per diluted share. At a 25x forward P/E (reasonable for a company with this growth trajectory and optionality), the operating business alone justifies $29.50 per share — already above the current price before any acquisition premium.

Interest Income: $271.5 million net in FY2025. This alone, capitalized at 15x, is worth $9.06 per share.

Acquisition Optionality: The $220 target requires GameStop to successfully deploy its capital into transformative acquisitions that generate meaningful earnings growth. This is where the risk is, and this is where the reward is. A single accretive acquisition generating $500 million in EBITDA at a 15x multiple would add $16.74 per share. Two or three such acquisitions, combined with operational improvement, could reasonably get GameStop into the $80–120 range on fundamentals alone — with squeeze mechanics and index inclusion providing additional catalysts.

S&P 500 Eligibility: GameStop has satisfied the profitability requirements for S&P 500 inclusion. The remaining barrier is the market cap threshold of approximately $22.7 billion (as of mid-2025). If GameStop executes a significant acquisition and the market re-rates accordingly, index inclusion would trigger mandatory buying from Billions in passive AUM.

The $220 target is ambitious. It requires flawless execution and favorable market conditions. But it is not unreasonable given the unique confluence of a $9 billion war chest, a CEO whose entire compensation depends on reaching $100 billion, insider buying from both the CEO and one of history's most celebrated contrarian investors, 66 million directly registered shares held by 177,522 committed retail investors, and a retail shareholder base that has proven its conviction over five years.

Risks

I am bullish, not blind. Risk:

Revenue continues to decline in the legacy retail business. Digital distribution of games is a permanent structural headwind. If collectibles growth stalls — which can happen in any consumer trend — margin expansion reverses.

Bitcoin holdings introduce cryptocurrency volatility. The covered call strategy with Coinbase adds counterparty risk. The $131.6 million loss in FY2025 is a reminder that this asset class cuts both ways.

The $4.2 billion in convertible notes, while zero-coupon, represent potential dilution upon conversion. The warrant distribution added approximately 59 million additional shares that could enter the market if exercised at $32. Cohen's CEO Performance Award, if all milestones are achieved and options fully exercised, would add approximately 171.5 million shares — though this only occurs in a scenario where the market cap has reached $100 billion, meaning existing shareholders would already be sitting on approximately 10x returns.

Execution risk on acquisitions is the single largest risk to the bull thesis. Deploying $9 billion wisely is harder than accumulating it.

Market narrative games persists. The 22% stock drop following the June 2025 bond announcement was driven by standard convertible bond hedging mechanics — arbitrageurs shorting the underlying stock to hedge their conversion exposure — not by a fundamental rejection of the strategy. However, legacy media framed it as a loss of confidence, which is precisely the kind of narrative distortion that persists in the absence of analyst coverage. With zero institutional coverage, there is no professional counterweight to correct these mischaracterizations, leaving retail investors to navigate misleading headlines on their own. This is a risk because not everyone sees thru a more elaborated perspective.

Conclusion

The numbers in FY2025 are no longer early signals of a turnaround. They are the completed transformation. Net income of $418 million. Free cash flow of $597 million. Gross margins at 33.0%. SG&A cut by $220 million in a single year. $9 billion in cash with zero interest expense on the debt.

Ryan Cohen has zero salary and 42 million shares. His stock options pay nothing unless GameStop reaches $100 billion — and even then, he has to buy the shares with his own money. Michael Burry has 13% of his portfolio in GME. Three board members bought alongside Cohen in the same week. 66 million shares are directly registered by 177,522 retail investors who chose to put their names on the certificates.

Every quarter, Wall Street says revenue is declining. Every quarter, the bottom line gets stronger and the cash pile gets larger. Every quarter, the same outlets that championed WeWork's revenue growth and Peloton's subscriber count refuse to acknowledge what is happening in Grapevine, Texas.

As Cohen himself put it: short sellers are the dumb stormtroopers of the investing galaxy. They keep shooting. They keep missing.

Disclosure: This review reflects my personal analysis and I maintain a long position in GME. This is not financial advice. Do your own due diligence.