GameStop Corp. (GME): a theory of the bullish case

We came across a bullish thesis on GameStop Corp. on AlternativePaint6’s Value investing subreddit. In this article, we will summarize the bulls’ thesis on GME. GameStop Corp. stock was trading at $24.35 as of October 7. GME’s trailing P/E was 34.02 according to Yahoo Finance.

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GameStop Corporation (GME) represents a highly asymmetric investment opportunity, offering a low-risk, high-return profile based on operational turnaround and visible growth potential. Under Ryan Cohen’s two-phase strategy, the company successfully stabilized its business by cutting costs, closing underperforming stores, streamlining operations and increasing cash flow, thereby achieving profitability despite a temporary decline in revenue and inventory dilution.

This paves the way for phase two: growth and digitalization, focused on creating high-margin digital products, monetizing collectibles, and mobilizing a loyal customer base. The first and second quarters of 2025 marked the first profitable quarters with revenue growth, highlighted by a 63% increase in collectibles revenue. Strategic partnerships, such as with PSA for card pricing, create a transparent, high-margin ecosystem far superior to competitors like eBay, while upcoming offerings like Power Packs promise additional digital revenue streams.

GME trades at a market cap near $10 billion, close to its $8 billion cash reserve, which is a significant downside floor. Subtracting cash, the operating business (including a profitable base, partnership with PSA, and brand recognition) is valued at just $2 billion, implying an adjusted operating P/E of 4 to 11, significantly lower than its peers. The market continues to undervalue GME due to its history as a “meme stock” despite growing institutional ownership, which now totals approximately 45%.

The U.S. collectibles market alone could generate significant additional revenue, with even a 5% share potentially generating $1 billion in annual profits, supporting a stock price of $50-$100 conservatively, and much more if market share or additional revenue streams grow. With low downside risk and substantial upside potential, GME offers a compelling risk/reward profile relative to the S&P 500.

Previously we covered a bullish thesis on DICK’S Sporting Goods, Inc. (DKS) by BotMissile in May 2025, which highlighted the company’s strong fundamentals, attractive valuation, strategic acquisition of Foot Locker and opportunities to increase private label margins and optimize costs. The company’s stock price has appreciated approximately 25.62% since our coverage. The thesis still stands that DKS retains long-term strategic potential. AlternativePaint6 shares a similar view but emphasizes GME’s operational turnaround, digital growth, and asymmetric risk/reward profile in collectibles.