Ryan Cohen‘s GameStop Corp. (NYSE:GME) has delivered the most profitable quarter in company history, with $389.6 million in net income on sales of $835.3 million, up 14% year-over-year.

Cash, marketable securities and digital assets now sit at $9.7 billion. The board also approved a fresh $2 billion share repurchase authorization running through 2029, and the stock rose roughly 12% in after-hours trading.

Where The Money Is Coming From

Almost none of it came from selling video games.

Strip out a $268.4 million unrealized gain on eBay Inc. (NASDAQ:EBAY) derivatives and other one-off items, and adjusted net income was $179.3 million, still more than double the prior year’s $73.1 million.

The real driver is the collectibles pivot. The segment grew 65% year-over-year to $348.9 million, overtaking hardware and accessories to become GameStop’s largest revenue line at 41.8% of total sales. Cohen has framed trading cards including Pokémon and sports cards as a “natural extension” of the business with higher margins than gaming hardware and software.

SG&A dropped from $228.1 million to $201.6 million as Cohen continues to close stores and shrink overhead.

The $9.7 billion cash pile does the rest. At conservative T-bill rates, GameStop is collecting around $400 million annualized in interest income alone, increasingly a money market fund with a legacy retail brand attached.

What Polymarket Sees

Despite the print, Polymarket traders are still pricing GameStop’s $55.5 billion bid for eBay at just 16% odds of closing. The math behind the half-cash, half-stock offer may explain why.

Funding the equity portion would likely require issuing roughly $27.7 billion in new GameStop stock, more than double the company’s currently outstanding shares. The $2 billion buyback looks symbolic next to that dilution.

The $20 billion non-binding commitment letter from TD Securities is the other problem. At 6% to 7% rates, the carrying cost lands between $1.2 billion and $1.4 billion in annual interest, more than the record quarter generates when annualized.

The Paper Windfall

The bid has already generated a paper windfall for Cohen.

GameStop holds economic exposure to roughly 29 million eBay shares through American-style Put/Call Pairs expiring February 23, 2028, according to SEC filings, and the $268.4 million unrealized gain on those derivatives accounts for more than two-thirds of the company’s record net income.

The catch is that the gain is mark-to-market and could reverse if eBay’s stock drops back toward pre-bid levels.

Morgan Stanley analysts laid out four scenarios for the deal in a mid-May note, ranging from a sweetened bid to a withdrawal, a proxy fight, or a counter-bidder for eBay.

Michael Burry, who dumped his entire GameStop stake after the bid landed, captured the bear case in five words on Substack: “Never confuse debt for creativity.”

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