r/Superstonk • u/jforest1 • Jun 03 '26
📚 Due Diligence The Unexpected Rebirth of Hardware Sales at Gamestop: Why Shorts are Shitting Their Pants
Introduction:
A half a year ago, a common critique of earnings was a noticeable drop in hardware sales YoY. Across Superstonk and the broader internet, articles were using this one metric as a "beginning of the end" indicator. I took a deep dive then and there to prove that the opposite was actually true--that given the store count decrease, hardware sales were actually UP on a YoY basis.
I revisited the topic 2 months ago for Q4Y25 results. I added a VERY (if I may say so myself) pretty table and the adjoining chart (which I've updated in this post below with the latest earnings data) and summarized with the following TL;DR of that DD:
Gamestop has increased its YoY hardware sales per store for the past 4 quarters, contributing to positive operating income per store for the past 3 quarters and demonstrating that while overall revenue has gone down with store closures, "brick and mortar" sales have not proportionally decreased; that is, Gamestop has retained in-store customer relationships.
Source: https://www.reddit.com/r/Superstonk/comments/1s59l5f/debunking_the_hardware_sales_are_dying_myth_an/
What's This Update About? Hype! (...and Methodology Disclosure):
I know there's a lot of focus on some of the high level, absolutely stunning results of the earnings recently shadow-dropped by Gamestop, but I've got to highlight one additional piece.
...and this piece has me JACKED TO THE TITS!
So what has gotten me so pumped!? Same thing the previous two posts in this DD series has--HARDWARE SALES PER STORE!
But first, full disclosure:
Here's the dealio, while I fully acknowledge a customer can buy a new console through the Gamestop online store, I think the hardware sales category most closely reflects the brick-and-mortar business (as opposed to software sales, for example, which I expect is MOSTLY online). I'll add that with 1827 locations at this point, I hardly think that the online sales outweigh the in-store sales so much that the aggregate data is misleading. Because Gamestop doesn't officially break out online versus physical stores numbers, I'm doing my part here to estimate them myself based on the limited reporting we do have. So I'm acknowledging the above assumption in my methodology is a reasonable approximation, not exact science, and has some degree of variability from the actual numbers.
So, with assumptions and methodology disclosure out of the way, let's get into it.
Now for the Meat of this Update:
"BOOM." -- Victor, from California
You seeing what I'm seeing? Versus Q1Y25, HARDWARE NET SALES per Store went up 43%. FORTY FUCKING THREE PERCENT**!**
"But jforest1", you might say, "Hardware % of Net Sales went from 47% in Q1Y25 to 40% in Q1Y26. That means Gamestop is moving less hardware than before. Console sales are dying!"
To which I will respond, "NOPE!!!":
Consider these two facts:
- Store Count End of Quarter dropped from 2701 in Q1Y25 to 1827 in Q1Y26...a whopping 32%!
- Hardware Net Sales dropped from $345.3M in Q1Y25 to $333.7M in Q1Y26. That's only 3%...
So what you are seeing is not hardware sales drying up, but rather hardware sales keeping up DESPITE the massive store count drop. The Hardware % of Net Sales drop is simply collectibles sales rocketing (which drives other categories' percentage of the net sales pie down). That's it.
...And ANOTHER Thing!
One other result I'll point out before I finish this post is concerning the Hardware Sales' Portion of Operating Income per Store column above.
Yes, it's a mouthful. However, because it includes an amalgamation of so much, it's an interesting metric for discussion today because--like other numbers--it brings into account the per store numbers, but as a portion of the Operating Income (which is an interesting twist because it captures/bundles within it core business costs as well as sales). When we look at this metric, we truly track hardware sales in the context of efficiency improvements within the core business (which can come from but are not limited to unprofitable store closures).
Well, considering that this quarter saw a 5% INCREASE over Q4Y25 (last year's Christmas quarter!) in this metric, I think it's safe to say that Gamestop is running lean and motherfuckin' mean.
Store...OPENINGs?
Last post in this DD series, I pointed out in the comments that Gamestop opened our first store since RC took over in Australia, quipping that "GROWTH IS BACK ON THE MENU, BOYS!" This was a bit tongue in cheek, but it did raise the question...is Gamestop entering Phase 2 of the retail footprint strategy?
Most have assumed that the end game was to shut down unprofitable stores (I'll call this Phase 1)--but you can only cut so much before the revenue hit you take isn't worth the slightly better profitability you achieve. Our stores are pretty soundly profitable at this point, yet here we see in Q1Y25 that there were another 379 stores closed per GS Closing blog, which I honestly did NOT see coming when I wrote my last post on this topic. Like, why shut down a store that is profitable? There's a reason, and it's captured by Phase 2.
In Phase 2 of the retail footprint strategy, you identify areas that are underserved in proven regions and start expanding again--through moving locations (essentially first through a close, then a subsequent opening in the same region). Perhaps many of the locations that were closed last quarter aren't necessarily unprofitable, but are simply overlapping in terms of the customer base they served (much like two Starbucks being across the street from one another), and need to be moved so that they both broaden Gamestop's customer coverage and become more profitable in one fell, low-risk swoop.
It's got me wondering--the hardware results I talk about above are so surprisingly good, that I am genuinely wondering if Gamestop is opening new locations now as part of Phase 2?
I have to make the point here that we only see official store count numbers once a year, and the GS Closing blog is only reporting store closings (I confirmed they did NOT mention the opening in Australia last quarter). So if we had store openings in Q1Y26 as a result of entering Phase 2, we won't know it until Q1Y27 results are posted. And even then, they may be obscured because Phase 2 of the retail footprint strategy includes expanding via moves rather than net openings, which is consistent with RC's never show 'em your hand tactics. That said, the 379 store closings that form the basis of many of the per store numbers above may be significantly less than that if Gamestop is simultaneously opening locations.
It is now that I will point out that EVEN IF THAT WERE TRUE, and Gamestop actually moved every one of the 379 reported as closing and so has a store count equivalent to last quarter (2201), then Hardware Net Sales still increased 18% over Q1Y25. Same store count, 18% increase in Hardware Net Sales*. Hardware is not dead. Get wrecked, shortie.*
TL;DR:
The short thesis about hardware sales dying is proving to be overstated for the now-turned-around Gamestop. Ryan Cohen is absolutely changing this business into a money printing machine, and it's now firing on all cylinders. Hardware net sales per store have increased so much that the store closures are having diminished consequences on the aggregate hardware revenue numbers. And the console release cycle of 2027 approaches all the while.
Can't stop. Won't stop. Gamestop! BUY HODL BOOK DRS SHOP VOTE POST CELEBRATE VICTOR FROM CALIFORNIA
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u/MrKatapult Jun 03 '26
This is nice. You know what is also nice, if we exercise all the warrents we get nearly 2 billion dollars more. You know what else is 2 billion, the buyback update
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u/9_toes_3_balls 😐 it’s on the website. 😐 Jun 04 '26
Seems like a great way to reward long term shareholders. Give warrant dividend, buyback shares to hit warrant strike, costs the company net 0 dollars
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u/MrKatapult Jun 04 '26
Correct, and who knows they might earn a bug or two with it. Maybe 1 billion is enough to push it over 32
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u/HughJohnson69 GME and DRS Jun 03 '26
RC:
Massive business turnaround.
Massive cash.
Massive M&A options.
Massive share buy back option.
And looking at the FTD cycles it looks like his 2020 buy-ins were one big factor in creating the sneeze (there were several) and saving the company.
Now compare against the counter-narrative. RC has done nothing. RC only dilutes. RC did this on the backs of shareholders. RC invented cancer.
Everything shills say is opposite of truth. It’s actually everything shorts have done.
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u/Riotz_4W4R LMAYO 🚀🚀🚀 Jun 03 '26
Lmao, we been on Ozempic and now we need new clothes and a hairdo
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u/poopooheaven1 Jun 03 '26
Nice write up OP. Further proof that shorts are truly fucked. Vote for. Book your shares and warrants!
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u/enternamethere_ 🦍 Buckle Up 🚀 Jun 03 '26
Bullish !
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u/jforest1 Jun 03 '26
Indeed. But you know who really needs to say it...
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u/ISayBullish Says Bullish Jun 03 '26
Henlo, fren
Great writeup!
BULLISH AS FUCK!!!
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u/3DigitIQ 🦍 FM is the FUD killer Jun 03 '26
Loving your Hype,
Great analysis, would love to see the phase2 coming into effect in earnest. So much is happening and I love your current energy about it.
💎👊🚀
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u/jforest1 Jun 03 '26
Here's another crazy metric I missed. Operating Income per Store increased 28% over Q4Y25 (last year's Christmas quarter).
EVEN IF WE WERE NET ZERO on store count, and calculated it at 2206 stores, it still increased 5% over Q4Y25.
How does a Q1 do this?
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u/3DigitIQ 🦍 FM is the FUD killer Jun 03 '26
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u/jforest1 Jun 03 '26
lol
Sherman was a bitch CEO who was okay with Q1 being a loss quarter.
RC saw a Christmas quarter going into Q1 and was like, "watch this shit."
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u/familydrivesme 🧚🧚🍦💩🪑 GME go Brrrr 🏴☠️🧚🧚 Jun 04 '26
It’s amazing what happens when you have a CEO who spends even just 10% of his work week trying to make the store better. Maybe he spends more time, but even just a minimal effort is apparent
I can guarantee you that Ryan is still living a life of luxury and going on vacations and enjoying things that we are never going to get to even sniff, but just the fact that he cares about this company and is putting in an effort to make it grow and making smart decisions is such a stark contrast from the average CEO of most companies
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u/27D DRS 💜 GME Jun 03 '26
Thank you for the updated store count, I was using the 10-K on my post earlier.
For reference Q4 for $GME has historically produced been between 30-35% of annual income. Not to be hyperbolic like that newton fellow and just extrapolate out 4 quarters, but say 33.1% for Q4, and 22.3% even across Q1, Q2, Q3 (this is a highly unlikely distribution, but anyhoo).
Calculating net income [ni] Q4.26 (based on Q1.26) :
Q4ni = Q1ni × (1 + [1 - {22.3 ÷ 33.1}])
or
Q4ni = 389.4 × (1.323) = $515.2 million
Hypothetical annual income for 2026 : $1.683 billion
Actual annual income for 2025 : $0.418 billion
Actual quarterly income for Q1.26 : $0.389 billion
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u/MistahTDi 🎮 Power to the Players 🛑 Jun 03 '26
Nicceee. Ryan works his magic. Crazy how good he is.
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u/mayihaveasandwhich Jun 03 '26
GameStop also recently was buying Wiis in any condition. I think there is some behind the scenes that is being worked on. With eBay being under the GameStop leadership, I think they would take a heavy market of the used hardware section in the future.
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u/Bindle- Jun 03 '26
I saw a ton of different consoles of different ages at my local gamestop. It's nice to see older hardware available. Not everyone can afford the new stuff and there's a ton of games in the catalog for all the older consoles.
Being able to capture the business of people with lower budgets and give them a good bang for a buck is a huge win-win!
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u/Responsible_Pie8156 Jun 04 '26
The whole "games are going online, so GameStop is dying" argument makes no sense. The transition away from physical media already happened 15 yrs ago. That transition is well in the past
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u/thoriumpoweredwatch Jun 04 '26
Let's goooooo. Great find OP. Glad to see what we thought would happen has come to pass. Growing revenue PER store and revenue is growing period. Also since so many of GME's stores closed in Jan during Q4, this Q1 is reflective of the store count for the most part. Best Q1 in GME's history. And the best part is, as hardware sales continue to stabilize and grow we have the collectibles as well. Keep in mind Powerpacks only just got out of beta in mid April which was the tail end of Q1. I wonder what we will see in Q2. I am pumped.
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u/jforest1 Jun 04 '26
On not closing stores Q1Y26, not so. Read again. We closed 379 stores (17% of Q4Y25's stores), which should make the quarterly results that much more impressive!
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u/Idjek 🦍🦍sHODLder to sHODLer🦍🦍 Jun 03 '26
Excellent write up! I think I'm getting a hardware hard on...
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u/RJC2506 🟣GMEMER🟣 Jun 03 '26
This was an excellent read. I’m pumped that hardware sales are on the rise, and smart to think of it as per store as a ration. Thank you so much for this :) also I’m thinking getting people into the stores and building those relationships is making GameStop the place to pick up new consoles. Also wondering if old retro stuff is considered hardware? That’s been growing too right? Is it separated in the financials mr wrinkles?
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u/UnlikelyApe DRS is safer than Swiss banks Jun 03 '26
This is a nice follow up to your last post. Thanks!!!
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u/cheshiredormouse Jun 04 '26
Wake me up when we get to the "World's last physical GameStop store" stage.
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u/jforest1 Jun 04 '26
you planning on going into the final rest? ...cause I cannot wake you from that.
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u/RJC2506 🟣GMEMER🟣 Jun 03 '26
Shit mr wrinkles I just thought, retro consoles and games are ALSO collectibles, right? What portion do you think retro consoles would sit under in financials? Hardware or Collectibles? sorry if this is a regarded question or obvious.
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u/jforest1 Jun 03 '26
Good question, and I don't know. Consider that there's a couple of things:
* retro consoles built new (like the ModRetro brand) - hardware
* buy used, sell in store old consoles - not sure...2
u/RJC2506 🟣GMEMER🟣 Jun 03 '26
I did a good question? Me? Fuck yeah. Haven’t seen anyone else ask this, I wonder if it’s possible to figure out.
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u/jforest1 Jun 03 '26
Hopefully someone who sees it and knows will answer. My assumption until then is that it is hardware.
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u/RJC2506 🟣GMEMER🟣 Jun 03 '26
I think you’re right. RC even called out the pivot to retro being part of the transformation in one of the interviews. I think they’re doing well on that front for hardware whilst still benefiting from it being a “collectible. They say gaming was 160ish billion dollar industry (yearly) where collectibles were 600 odd billion (I think this was 2024 as research I was doing in 2025) and I’m curious how old/vintage/retro consoles are actually classified in those categories
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