What Happened?
Shares of video game retailer GameStop (NYSE:GME) jumped 4.8% in the morning session after key inflation data (PCE) aligned with forecasts, bolstering hopes for continued interest rate cuts from the Federal Reserve.
The Personal Consumption Expenditures (PCE) price index, the central bank's preferred gauge of inflation, showed a slight year-over-year increase in August but did not surprise economists. This report was met with relief on Wall Street, as it suggests inflationary pressures remain contained, giving the Federal Reserve more leeway to continue its monetary easing policy. Investors interpreted the news as a positive sign that the Fed can support the economy without risking runaway inflation. The positive sentiment helped the major indices claw back some of the losses from a recent three-day slide, with stocks rising across various sectors.
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What Is The Market Telling Us
GameStop’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 16 days ago when the stock gained 4.7% on the news that the company reported strong second-quarter 2025 earnings that beat analyst expectations.
The video game retailer reported impressive Q2 results, with revenue growing 21.8% year-over-year to $972.2 million, surpassing Wall Street's estimate of $823.2 million. The company's profitability also saw a significant boost. Adjusted earnings per share came in at $0.25, easily beating analyst expectations of $0.16 and marking a substantial increase from the $0.01 reported in the same quarter last year. This strong performance was driven by improved operational efficiency, as the company's operating margin turned positive to 6.8%, a significant turnaround from a negative 3.6% in the prior-year period. Overall, the strong top- and bottom-line beats pleased investors.
GameStop is down 13.1% since the beginning of the year, and at $26.65 per share, it is trading 23.9% below its 52-week high of $35.01 from May 2025. Investors who bought $1,000 worth of GameStop’s shares 5 years ago would now be looking at an investment worth $10,565.
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