Should Investors Chase the Rally in GameStop (GME) Stock After Q4 Earnings?

GameStop GME shares popped +11% in today’s trading session as the world’s largest video game retailer was able to crush its Q4 earnings expectations after-market hours on Tuesday.Fueling the rally, GameStop also announced its attention to invest in Bitcoin in a bid to make use of its growing cash pile. Certainly, investors may be wondering if they should chase the post-earnings rally in the infamous meme stock with GME sitting on +100% gains over the last year but still down 16% in 2025.Image Source: Zacks Investment Research GameStop’s Q4 ResultsThanks to its cost-cutting initiatives, GameStop reported Q4 net income of $131.3 million or $0.30 per share which crushed EPS expectations of $0.09. Year over year, Q4 earnings spiked from $63.1 million in the comparative quarter or $0.22 a share.This was despite Q4 sales of $1.28 billion missing estimates of $1.45 billion and falling from $1.79 billion in the prior period. Image Source: Zacks Investment Research Full-Year ResultsRounding its operating year for fiscal 2025, GameStop's annual earnings spiked to $0.33 per share from EPS of $0.06 in FY24. That said, GameStop’s declining revenue has continued with total sales dropping to $3.82 billion versus $5.27 billion in FY24.Over the years, the steep decline in revenue has been attributed to a shift to digital gaming and increased competition from retailers such as Best Buy BBY, Walmart WMT, and Amazon AMZN.Image Source: Zacks Investment Research GameStop’s Impressive Balance SheetCorrelating with the decision to invest in Bitcoin, GameStop’s cash & equivalents have ballooned to $4.75 billion from $921.7 million a year ago. Further echoing the turnaround in GameStop’s operating efficiency is that the company now has $5.87 billion in total assets compared to $945.6 million in total liabilities. Bottom Line While it may be tempting to chase the rally in GameStop’s stock there could be better buying opportunities ahead. To that point, at $28 a share, GME still trades at a stretched premium in terms of valuation although GameStop’s management appears to have the company headed in the right direction despite the continued decline in revenue. GameStop’s Q4 ResultsThanks to its cost-cutting initiatives, GameStop reported Q4 net income of $131.3 million or $0.30 per share which crushed EPS expectations of $0.09. Year over year, Q4 earnings spiked from $63.1 million in the comparative quarter or $0.22 per share.This was despite Q4 sales of $1.28 billion missing estimates of $1.45 billion and falling from $1.79 billion a year ago.Chart GameStop’s Q4 ResultsThanks to its cost-cutting initiatives, GameStop reported Q4 net income of $131.3 million or $0.30 per share which crushed EPS expectations of $0.09. Year over year, Q4 earnings spiked from $63.1 million in the comparative quarter or $0.22 per share.This was despite Q4 sales of $1.28 billion missing estimates of $1.45 billion and falling from $1.79 billion a year ago.Chart Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GameStop Corp. (GME): Free Stock Analysis Report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report Best Buy Co., Inc. (BBY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks