GameStop's Great Contraction: Store Closures, Strategic Pivots, and the Fight for a Future

The Scale of the Shutdown: A Retail Footprint in Rapid Retreat

The closures slated for early 2026 are not an isolated event but the latest chapter in a multi-year downsizing. Following a staggering 590 store closures in the U.S. in 2024 alone, this new wave of an estimated 390 to 400 shuttered locations could reduce the company’s American brick-and-mortar footprint by 20% to 30% in just a three-year period.

This retrenchment is global. From a mid-2010s peak of over 6,000 stores worldwide, GameStop operated approximately 3,200 stores globally as of early 2025, with about 2,325 in the United States. The company has been winding down its presence across Europe, closing 336 stores there in 2024 and selling its Italian subsidiary, with exits from markets including Germany, France, Austria, and Ireland.

The official rationale, per company statements and a December 2025 SEC filing, is a “store portfolio optimization review,” driven by lease expirations and the need to adapt to market conditions. The human cost, however, is palpable. Reports from affected employees on online forums paint a picture of sudden unemployment, with one alleged former worker criticizing leadership for viewing staff “as numbers on a spreadsheet.”

The Digital Tsunami: Why Physical Game Retail is Crumbling

The fundamental pressure forcing this contraction is no secret. The core of GameStop’s traditional business—buying, selling, and trading physical game discs—is besieged by a market that has moved decisively online. By December 2024, digital game sales accounted for 95% of the total market value in the gaming industry. This shift erodes the very foundation of GameStop’s legacy trade-in model and new game sales, creating a long-term, existential headwind.

The 2021 meme-stock frenzy, which saw coordinated retail investors on platforms like Reddit’s r/WallStreetBets catapult GameStop’s share price from under $20 to over $480, was a historic anomaly. While it provided a temporary financial lifeline and cultural moment, it did nothing to alter the underlying digital trajectory of the gaming industry. The subsequent volatility, including a stock decline of around 36% over the past 12 months, underscores that the company’s fundamental challenges remained.

The Cohen Strategy: Betting on Cards, Collectibles, and Cost-Cutting

Confronted by this irreversible digital tide, CEO Ryan Cohen is executing a sharp strategic pivot designed not to swim against the current, but to find entirely new waters. The plan is to drastically reduce reliance on low-margin video game software and pivot toward categories with higher returns. This isn't just about selling more Funko Pops; it's a targeted expansion into adjacent collectibles markets.

Key initiatives signal this new direction. The company is aggressively expanding its trading card business, highlighted by a partnership with grading giant Professional Sports Authenticator (PSA) and a headline-grabbing, paid $30,000 promotion for a rare Pokémon card in late 2025. It has also developed a digital trading card platform called "Power Packs," attempting to create a proprietary ecosystem. Marketing efforts now frequently target the broader “nerdy market” through influencer campaigns with figures like Casey Neistat.

The financial outcome of this shift, combined with aggressive cost-cutting, has been notable. GameStop reported becoming profitable in 2025, a feat attributed to strategic adaptations, severe overhead reduction, and investments in Bitcoin. This austerity has, according to some analysts, resulted in “one of the strongest balance sheets” in corporate America, providing a war chest for its new speculative bets.

Leadership, Controversy, and Conflicting Analyst Views

The entire transformation occurs under the shadow of an unprecedented leadership incentive. CEO Ryan Cohen is eligible for a $35 billion performance-based stock option payout if he can guide GameStop to a $100 billion market capitalization—a valuation approximately ten times higher than its level at the time of reporting. This high-stakes financial gamble unfolds while the "portfolio optimization" directly impacts thousands of employees, reinforcing the tension between corporate strategy and individual consequence.

This gargantuan goal fuels deeply divided analyst perspectives. The skeptical view is bluntly summarized by one analyst’s quote: “We remain convinced that GameStop is doomed.” From this vantage point, the store closures are a symptom of inevitable decline, and the pivot into collectibles is a desperate, likely insufficient attempt to replace a multi-billion-dollar core business.

A contrasting perspective views the closures and pivot not as death throes, but as harsh, logical adaptation. In this narrative, GameStop is proactively shrinking its vulnerable physical game business to fund a focused bet on becoming a niche powerhouse in high-margin collectibles and trading cards. The strong balance sheet and reported profitability are cited as evidence that a leaner, more focused company is emerging from the shell of the old retail giant.

GameStop’s future is not a simple binary of doom or triumph. It is successfully executing a contraction of its legacy business while making a high-stakes, speculative bet on a new identity. The company’s fate now hinges on a precarious race: can the growth of its new, smaller core in collectibles and digital card platforms outpace the relentless decline of its physical video game business? All the while, this corporate metamorphosis is steered by a leader whose personal financial incentive is tied to achieving a near-mythical valuation. The ultimate question may no longer be about mere survival, but what form that survival takes: is the endgame a profitable niche player, or the realization of a $100 billion dream? The story of GameStop is no longer just about video games; it’s a case study in radical corporate transformation, where the final level has yet to be loaded.