Ryan Cohen’s GameStop Turnaround: Is This Stock Finally a Buy in 2025?

GameStop's epic transformation under CEO Ryan Cohen hits another milestone—retail traders are watching every move.

The Cohen Effect

Cost-cutting measures slash overhead while digital infrastructure gets rebuilt from the ground up. Physical stores transform into experiential hubs rather than mere retail outlets.

Market Momentum

Short interest remains elevated—because Wall Street never learns—while Cohen's cryptic tweets continue driving volatility higher than a crypto pump-and-dump scheme.

Investment Reality Check

Fundamentals show improvement but valuation still outpaces actual performance. Then again, since when did traditional metrics matter in this new market paradigm?

Bottom line: Cohen's executing the turnaround playbook perfectly—but whether that translates to sustainable shareholder value remains the billion-dollar question traditional analysts still can't answer.

Turnaround

When Cohen took over, his first act was to reduce costs. He called for "extreme frugality," saying every expense needed to be looked at closely. These efforts could be seen in GameStop's Q2 results, as its operating expenses fell 19% year over year to $218.8 million.

However, companies cannot simply cut their way to success. GameStop is still feeling the pressures of the video gaming industry. In Q2, its game sales fell nearly 27% to $152.5 million, and while console and other hardware and accessories sales were up 31%, helped by the release of the Nintendo Switch 2, they were still down over the past six months.

Where GameStop has found success, though, is in the collectibles market. GameStop entered this market in 2016, but a deal with trading-card grading company PSA last year to become an authorized dealer and allow collectors to drop off cards at its locations to be sent off for grading has reinvigorated its business.

The trading card market for both sports and popular games such as Pokémon has taken off in recent years. Collectors are buying packs to chase rare cards and sending in both new and vintage cards to be graded. This helped lead to GameStop's collectibles revenue surging 63% in Q2 to $227.6 million.

Overall, GameStop's sales jumped 22% to $972.2 million. Adjusted net income surged to $138.3 million, or $0.25 a share, from $5.2 million, or $0.01 a share.

Importantly, the company is also generating cash. It produced $117.4 million in operating cash FLOW and $113.3 million in free cash flow in the quarter.

GameStop took advantage of its high stock price during its meme stock days to sell stock and raise a lot of cash. Earlier this year, it also continued to raise more cash, this time through a 0.00% convertible bond offering, meaning it does not have to pay any interest on the debt.

At the end of Q2, it had $8.7 billion in cash on its balance sheet and $4.2 billion in debt. It also owned(BTC 0.64%) worth $528.6 million.

Image source: Getty Images.

Is GameStop stock a buy?

Cohen has done a tremendous job of helping turn around the GameStop business. He slashed costs and leaned into the trading card market just as it was getting hot. It's now a solidly profitable company generating strong free cash flow.

Meanwhile, the company's valuation is not as ridiculous as it once seemed. It trades at a forward price-to-earnings ratio (P/E) of 34 times this year's single analyst estimate, and it has $5 billion in net cash and Bitcoin on its balance sheet, equal to more than $11 per share. Exclude that, and it has an enterprise value-to-earnings ratio of about 14 times. Note, however, that the current consensus comes from only one analyst estimate, and the company doesn't offer guidance.

If the trading card market can remain hot, GameStop finds itself in a good position. The release of the Nintendo Switch 2 helped console sales this quarter and should be a tailwind into the holidays. Meanwhile, there should be a gaming console refresh in the coming years.

The bigger question is: What are Cohen's plans for his growing stockpile of cash? The bitcoin investment wasn't a bad move, but that alone isn't going to move the needle. Make an investment in the right business, and the stock could climb. There have been rumors that GameStop could acquire PSA, but PSA has denied this.

At this point, the stock is worth considering as a small, speculative investment, given how well Cohen has proven himself.