GameStop Corp. reported robust free cash flow results in the quarter ending Aug. 2, positioning GME stock as deeply undervalued.
The company's revenue growth and free cash flow performance suggest significant upside potential for GME stock.
Despite closing several stores, GameStop achieved a +21.78% year-over-year increase in net revenue, reaching $972.2 million in Q2.
GameStop's sales mix now includes a notable increase in collectibles sales, contributing to higher profitability.
With an operating cash flow of $117.4 million and a free cash flow of $113.3 million in Q2 2025, GameStop's financial stability is improving.
Strong Revenue Growth
GameStop's Q2 net revenue rose +21.78% year-over-year to $972.2 million, despite store closures and divestitures.
Collectibles Sales Boost
Collectibles, including Pokémon trading cards, now account for over one-quarter of GameStop's sales, up from 16.4% a year ago.
Improved Free Cash Flow
GameStop's FCF increased to $113.3 million in Q2 2025, showcasing a +73.8% year-over-year growth.
- GameStop stock closed at $24.93 on Sept. 12, up from $22.94 before the earnings release, indicating positive market sentiment.
- Analysts estimate GameStop's SOTP assessment to be over $31 per share, suggesting the stock is undervalued.
GameStop's strong financial results, including revenue growth and free cash flow performance, highlight its resilience and potential for future growth despite store closures. The increasing sales mix of collectibles and the focus on improving operational efficiency are positive signals for investors.