Shares of GameStop (NYSE:GME | GME Price Prediction) are up 10% to $23 on Wednesday morning, snapping back from a brutal stretch after the video game retailer posted its highest quarterly net income on record and approved a fresh $2 billion buyback. The pop comes after Tuesday’s $20.92 close and an after-hours surge that extended into the premarket session.
The catalyst landed after the bell on June 2, when GameStop released its Q1 FY2026 results and the board unanimously authorized a new repurchase program. Meanwhile, takeover target eBay (NASDAQ:EBAY) is barely moving, with eBay stock up less than 1% to around $109.36 as traders digest GameStop’s continued pursuit.
The rebound is notable because GameStop stock was down 21% over the past month heading into the print. Today’s move is a snapback on a genuine surprise rather than continued momentum.
Record Earnings, With an Important Asterisk
GameStop reported net income of $389.6 million, its highest quarterly profit ever, versus $44.8 million in the prior-year quarter. Net sales rose 14% to $835.3 million, with the collectibles segment surging 65% year over year to become the largest product category.
The operational turnaround at GameStop is genuine. Operating income swung to $143.3 million from a $10.8 million operating loss a year earlier, and gross margin expanded to 41% from 35%. Diluted EPS came in at $0.66, with reported diluted EPS of $0.30 against an estimate of $0.04.
However, the headline figure deserves context. The record net income was boosted by a $268.4 million unrealized gain on a derivative asset tied to eBay common stock (put and call options). Stripping that out, GameStop’s adjusted net income was $179.3 million, versus $73.1 million in the prior-year quarter, still a substantial improvement.
$2 Billion Buyback Reignites the Squeeze Chatter
GameStop’s board unanimously approved a discretionary $2 billion share repurchase authorization on June 2, 2026, running through June 2, 2029. The program replaces the prior authorization from March 2019.
The bulls on Reddit are reading the program as ammunition to pressure short positions and defend GameStop stock. Skeptics view the move as a distraction from core retail execution, especially given the eBay-related derivative exposure. GameStop’s own release flags potential short squeezes among risk factors, and Reddit’s r/stocks sentiment briefly peaked at 72 (bullish) during the 3 a.m. ET premarket rally window.
The eBay Pursuit Escalates
GameStop has increased its eBay stake to about 7%, up from around 5%, while continuing a hostile pursuit that eBay’s board has so far rejected. eBay rebuffed GameStop’s unsolicited $56 billion offer last month, calling the proposal “neither credible nor attractive.”
GameStop CEO Ryan Cohen has stated that he remains committed to acquiring eBay and could take the offer directly to shareholders if needed. The size mismatch is significant, with eBay roughly five times as large as GameStop. The prediction market traders on Polymarket currently price the deal at just a 16% implied probability.
What to Watch
The setup leaves a few clear catalysts for GameStop stock through the regular session and into the weeks ahead. Investors can watch for whether GameStop begins executing under the new authorization, eBay’s formal response to the increased stake, and any move by Cohen to bypass the eBay board.
On the operational side, the 65% collectibles growth is the cleanest signal that GameStop’s pivot is taking hold. From a research standpoint, prudent investors may consider sizing their positions to reflect the company’s meme-stock volatility profile and the binary nature of the eBay outcome. GME stock was still down 32% over the past year before today’s move, a reminder that the operational story and the trading story don’t always align.
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