GameStop Revenue Fell 14% in the Fourth Quarter. Here Are 3 More Reasons Investors Should Steer Clear of This Meme Stock.

By Jeremy Bowman – Mar 25, 2026 at 6:06PM ESTKey PointsGameStop has reinvented itself as a collectibles retailer.Thanks to cost-cutting, the business has turned profitable.The company has diluted shareholders with at-the-market offerings. GameStop (GME +1.16%) might be king of the meme stocks, but investors still hoping for a turnaround from the video game retailer will have to wait longer. GameStop reported fourth-quarter results yesterday, and while profits grew thanks to cost-cutting, revenue in the quarter was down 14% to $1.1 billion, and it's hard for any business to mount a comeback when sales are falling by double-digits. Despite that decline, it managed to grow gross profit from $363.4 million to $386.8 million, a reflection of its evolution from a video game retailer to one more focused on collectibles, including trading cards. The company slashed its selling, general, and administrative expenses from $282.5 million to $241.5 million as well, which led to roughly flat net income, or $127.9 million, down from $131.3 million, though that includes a $151 million loss on digital assets. Shares outstanding also spiked due to several at-the-market offerings, and earnings per share declined from $0.29 to $0.22. In addition to the double-digit decline in revenue, let's take a look at three other reasons to avoid the stock. Image source: Getty Images. 1. The business model isn't reliable GameStop may have needed to pivot away from video games in the digital era, but selling collectibles and investing in crypto doesn't seem like a serious or sustainable business model. The collectible business can lead to fad-like volatility, and crypto is prone to wild swings as well. While the company deserves kudos for returning the business to profitability, that doesn't make it a desirable stock to invest in. 2. Ryan Cohen's performance plan is questionable In January, the company announced a $35 billion performance-based pay plan for CEO Ryan Cohen, which would grant him options to buy 171.5 million GameStop shares. While the plan is attached to key performance goals, and Cohen is willing to work for free without it, the plan would dilute existing shareholders further, as the strike price of $20.66 on the option is below where the stock is currently. ExpandNYSE: GMEGameStopToday's Change(1.16%) $0.27Current Price$23.07Key Data PointsMarket Cap$10BDay's Range$22.48 - $23.4952wk Range$19.93 - $35.81Volume350KAvg Vol7.3MGross Margin30.79% 3. Dilution is likely to continue GameStop's shares outstanding jumped by nearly a third last year, and while the company is profitable, more equity raises could be in its future. With revenue falling, its profits don't look sustainable. At this point, the stock is simply too risky, and its upside potential looks limited. There are plenty of better options available on the stock market, even for investors intrigued by the meme stock appeal. Read NextMar 4, 2026 •By Keith NoonanYour Complete Guide to the Russell 2000 Stock Market IndexFeb 27, 2026 •By Keith NoonanIs GameStop the Next Berkshire Hathaway?Mar 25, 2026 •By Dave KovaleskiMy Top 2 Megacap Stocks to Buy After Walmart's Latest PullbackMar 25, 2026 •By Geoffrey Seiler5 No-Brainer Dividend Stocks to Buy Right NowMar 25, 2026 •By Adria CiminoThis Ridiculously Cheap Warren Buffett Stock Could Make You RicherMar 25, 2026 •By Joe TenebrusoWhy Chewy Stock Rallied TodayAbout the AuthorJeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011.

Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.TMFHoboX@TMFBowmanStocks MentionedGameStopNYSE: GME$23.08(+1.16%)+$0.27*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.