GameStop

• 1. Introduction

  ›

  GameStop was founded in Dallas in 1984 as Babbage's, a software retailer named after the 19th-century computing pioneer Charles Babbage. Two former Harvard Business School classmates, James McCurry and Gary Kusin, opened its first store at Dallas's NorthPark Center with the backing of an early investor named Ross Perot. From those origins in a single strip-mall storefront, the company grew into the largest video game retailer in the world, operating more than 7,500 stores at its peak. Then it shrank, closed thousands of locations, and became the subject of one of the most dramatic stock market events in recent memory. How did a business built on cardboard boxes of physical games end up at the center of a Wall Street crisis? And what does its journey reveal about the fate of brick-and-mortar retail in the digital age?

• 2. From Babbage's to GameStop

  ›

  The early years of the company were shaped by rapid pivots and unexpected partners. Babbage's focused first on Atari 2600 software, then began selling Nintendo games in 1987. By 1991, video games made up two-thirds of its revenue. A 1988 initial public offering gave the company public capital, and by the mid-1990s it was large enough to merge with Software Etc., an Edina, Minnesota-based personal computing retailer, to form NeoStar Retail Group in 1994.

  The merger was structured as a stock swap. James McCurry became NeoStar's chairman, while Gary Kusin and Daniel DeMatteo retained their titles as presidents of Babbage's and Software Etc. respectively. Software Etc. chairman Leonard Riggio joined NeoStar's executive committee. The arrangement proved fragile. Kusin resigned in February 1995 to start a cosmetics company. NeoStar merged its two subsidiary brands into one unit in May 1996 amid declining sales. That September, unable to secure credit to buy holiday inventory, NeoStar filed for Chapter 11 bankruptcy.

  The assets sold for $58.5 million. The buyer was Riggio, who also chaired Barnes & Noble. Electronics Boutique had also bid, but the bankruptcy judge accepted Riggio's offer because it preserved 108 more stores than the competing bid. Around 200 stores closed anyway. Riggio installed Richard Fontaine as chief executive of the reorganized entity, renamed Babbage's Etc. In 1999, Babbage's Etc. launched the GameStop brand with 30 stores in strip malls and opened gamestop.com, an early online game sales site.

• 3. Acquisitions and Global Expansion

  ›

  Barnes & Noble Booksellers purchased Babbage's Etc. in October 1999 for $215 million. Because Riggio controlled both entities, a special committee of independent directors reviewed and approved the deal. A few months later, in May 2000, Barnes & Noble acquired Funco, the parent of Eden Prairie, Minnesota-based video game retailer FuncoLand, for $160 million. That acquisition brought with it Game Informer, a video game magazine first published in 1991. Funco was renamed GameStop, Inc. in December 2000.

  A second initial public offering arrived in February 2002, with Barnes & Noble retaining 67% of outstanding shares and 95% of voting shares. Barnes & Noble held that position until October 2004, when it distributed its 59% stake to its own shareholders, making GameStop independent. The company then embarked on a decade of aggressive buying. In 2005, it acquired EB Games for $1.44 billion, instantly expanding into Australia, Canada, Europe, and New Zealand and pushing its store count past 4,250 worldwide. In 2007, it bought 70 Rhino Video Games locations from Blockbuster for an undisclosed sum. In April 2008, it picked up Free Record Shop's 49 Norwegian stores. That October, it acquired French retailer Micromania and its 332 stores for $700 million.

  At its largest, GameStop operated over 7,500 stores across dozens of countries. European sales alone reached $1,810 million in 2011, when the company ran more than 1,400 European locations. Its Australian division, built partly on the Zing Pop Culture merchandise brand launched in 2014, would later prove to be the only profitable segment of the global business for three consecutive fiscal years: 2020, 2021, and 2022, posting operating earnings of US$52.2 million, US$30.6 million, and US$9.4 million respectively across those years.

• 4. The Short Squeeze of 2021

  ›

  In January 2021, retail investors on Reddit noticed that short interest in GameStop stock exceeded 100% of available shares. The observation set off a coordinated buying campaign. Over the course of two weeks, the stock climbed roughly 1,500%, reaching an all-time intraday high of over US$500.00 on the 29th of January 2021 on the New York Stock Exchange. The share had been trading at $17.25 before the surge began.

  The spectacle drew intense media coverage in January and February 2021, and regulators took notice. The Securities and Exchange Commission later released a report stating that while a short squeeze did not appear to be the main driver of events, and a gamma squeeze was even less likely, the episode illustrated the potential impact of short selling and short covering. The report acknowledged that retail investor buying power played a role but characterized it as only a partial explanation for the volatility.

  Ryan Cohen, founder of the pet supply company Chewy and already a significant GameStop shareholder, was named chairman in April 2021, effective June 2021. That same month, GameStop appointed former Amazon executives Matt Furlong and Mike Recupero as CEO and CFO. Cohen later removed Furlong in June 2023 and assumed the CEO role himself in September 2023, taking no salary. The short squeeze had briefly made GameStop one of the most-discussed companies in the United States. Its Fortune 500 ranking at the time was 577th.

• 5. Decline and Store Closures

  ›

  The business problems predated the 2021 stock drama by years. Shares fell 16% in 2016. On the 28th of February 2017, they dropped an additional 8% after Microsoft announced its Xbox Game Pass subscription service. GameStop reported a 16.4% drop in holiday-season sales for 2016 and announced it would close more than 150 stores that year. Its total revenue fell 7.6% to $3.06 billion in the quarter ending the 2nd of February 2018.

  The company's expansion into smartphone retail compounded its troubles. A business publication estimated that GameStop spent $1.5 billion acquiring Spring Mobile and its store locations, but sold Spring Mobile to Prime Communications in 2018 for only $700 million, leaving roughly $800 million in debt. For the 52-week period ending the 2nd of February 2019, GameStop reported a record net loss of $673 million, against a net profit of $34.7 million the prior year. Net sales for fiscal year 2018 reached $8.29 billion but fell 3% year-on-year.

  The European retreat was equally stark. GameStop closed its UK website in December 2016 and shuttered its Nordic operations, closing 100 stores across Denmark, Finland, Norway, and Sweden by July 2020. It withdrew from Austria and Switzerland in October 2022, cut its German presence from 170 stores to 70, then closed all remaining 69 German stores in November 2024. It sold its Italian stores to Cidiverte and announced plans to sell its French operations in February 2025. By the summer of 2025, only the Micromania brand in France would remain of GameStop's European footprint. Over 400 stores closed in January 2025 alone, the highest single-month closure count in the company's history.

• 6. The Circle of Life and Used Games

  ›

  GameStop's internal sales culture became a source of controversy in February 2017, when employees began speaking publicly about a program called Circle of Life. The policy required each employee to ensure a set percentage of their sales went toward pre-orders, reward card sign-ups, used game purchases, or trade-ins. Former and current employees described being pressured to mislead customers in order to hit these targets. Workers reported poor working conditions and emotional distress tied to the metrics. GameStop later revised the program to measure store performance collectively rather than targeting individuals.

  The used game model had always been central to GameStop's margins. Trade-ins carried twice the gross margin of new game sales. Video game developers and publishers objected, pointing out they received no revenue when a used copy changed hands. GameStop countered in 2009 by stating that 70% of store credit generated through trade-ins was used to buy new games, producing close to $2 billion in annual revenue. The pre-order bonus system offered another lever: publishers worked with GameStop to include exclusive in-game items or physical goods for customers who pre-ordered at its stores. Bonuses for titles like Call of Duty: Black Ops in November 2010 included exclusive avatar costumes, while other games came with art folios, soundtracks, or figurines.

  Michael Burry's investment firm Scion Asset Management sent a letter to GameStop executives in August 2019, urging a $238 million stock buyback. The letter disclosed that Scion held approximately 2,750,000 shares, representing about 3.05% of the company. Burry argued publicly that both Sony and Microsoft planned to include disc drives in their next-generation consoles, which would extend the life of physical game retail. In December 2019, GameStop spent $178.6 million buying back 34.6 million shares at an average price of $5.14 per share.

• 7. Bitcoin, NFTs, and What Remains

  ›

  GameStop's attempts to find new businesses beyond physical games produced a mixed record. Its NFT marketplace launched in beta on the 11th of July 2022, built on Ethereum blockchain technology. The platform included a vetting process for artists and removed listings that violated copyright, including NFTs linked to HTML5 games whose creator lacked a license. By December 2022, GameStop had laid off a large portion of the team working on the platform. In August 2023, it announced the shutdown of its crypto and NFT wallet, citing regulatory uncertainty. The NFT marketplace closed completely on the 2nd of February 2024.

  Game Informer, the video game magazine GameStop had acquired along with FuncoLand in 2000, was discontinued in August 2024 and later sold to Gunzilla Games in 2025. The magazine had been a loyalty benefit for members of GameStop's PowerUp Rewards Pro program. On the 25th of March 2025, GameStop announced a plan to use its cash reserves to purchase Bitcoin. Then on the 3rd of May 2026, GameStop proposed to acquire eBay for approximately $56 billion in a cash-and-stock deal. GameStop already held a 5% stake in eBay through shares and derivatives. eBay rejected the offer on the 12th of May 2026, calling it neither credible nor attractive. Whether those bids signal a genuine strategic pivot or simply reflect a company still searching for direction, the store count tells its own story: from a peak above 7,500 locations to 2,206 as of the company's most recent figures.