GameStop (GME) management said in January that the company is looking at a major acquisition. This update was unusual, as it came directly from CEO Ryan Cohen, who said a "very, very, very big" acquisition was in the cards. GameStop holds nearly $9 billion in cash, so Cohen’s comments generated excitement. Since the aim of this acquisition is to generate gains through efficiency and transformation, it's clear that GameStop will look to acquire an entity in distress. Cohen said GameStop is targeting a company with a “sleepy management team.”
There is speculation now that the acquisition target in question could be Best Buy (BBY). But this is just speculation, as GameStop has not confirmed anything. A research note from Don Bilson of Gordon Haskett Research Advisors is what’s creating all the noise, despite not explicitly stating the news. One reason for this speculation is GameStop’s latest 10k filing, wherein the company reported that it added $700 million to a bank account pledged as collateral for some existing transactions.
Irrespective of whether GameStop is buying Best Buy, one thing is quite certain: there will be noise around GME stock, there will be volatility, and as a result retail traders will be flocking to buy shares in hopes for a rally.
About GameStop Stock
GameStop is a global retailer of video games, consoles, and collectibles operating both online and in physical stores. Founded in 1996, GameStop is headquartered in Grapevine, Texas.
The last 12 months have returned only 5% for shareholders, although that’s hardly why traders buy GME stock. They trade it for volatility, and there has been no shortage of that. After climbing substantially in 2024, the stock gave half of its gains back within a few months, only to go up again and then back to the same level in the first half of 2025. There has been relative stability since, but the returns have been muted.
GameStop’s ability to acquire a big company stems from its healthy cash position. The company holds $6.3 billion in cash and cash equivalents, and then some more as marketable securities, which is a healthy position for any acquisition. There is no short-term debt, and the current assets easily cover the long-term debt of $4.1 billion. The company has also generated consistent free cash flow, culminating in $597 million in the most recent quarter. GameStop gets labelled as a dying business, but the books are healthier than the sentiment suggests.
GameStop Reports Lower Sales and Profits
GameStop announced its fourth-quarter earnings on March 24, reporting sales and net income lower than last year. Revenue of $1.1 billion was much lower than the $1.28 billion in the same quarter last year. Net income came in at $127.9 million, down from $131.3 million in Q4 2024. Interestingly, the cost of sales as a percentage of revenue was down to 65% from the previous year’s 71.7%, marking one of the positive points from the earnings report.
As usual, the company did not hold an earnings call. But a noticeable change from the prior-year period was the balance sheet, which is grabbing investors' attention now. In Q4 2024, GameStop only had $4.8 billion in cash, cash equivalents, and marketable securities. Now, the company is sitting on $9 billion. Whatever GameStop is planning to buy with this money, mangement certainly has planned well for it — and so far they seem to be executing well, too.
What Are Analysts Saying About GameStop Stock?
Since the core business is struggling and prospects look bleak, no analysts tracked by Barchart have coverage of GME stock. However, this does make speculation around a potential acquisition all the more interesting. With limited institutional coverage, retail traders may have a chance to get in early on a stock that otherwise receives its fair share of coverage in financial media.
On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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