GameStop shares soared 40% in premarket trade on Wednesday, March 22, after the firm posted its first quarterly profit in two years. 

Despite a 1.2% fall in revenue to $2.23 billion, the profit of $48.2 million in the fourth quarter of 2022 is a substantial improvement over the $147.5 million loss in the same time the previous year, according to Business Insider.

GameStop Steers Back to Profitability

According to GameStop CEO Matt Furlong, the company was able to return to profitability in 2022 by cutting costs and optimizing inventories. This includes lowering the number of employees and simplifying the company's operations.

GameStop is projected to continue reducing expenses this year, including closing stores in key European countries. Furthermore, the company intends to expand its higher-margin sectors, such as collectibles and toys.

"Although there is a lot of hard work and necessary execution in front of us, GameStop is a much healthier business today than it was at the start of 2021, Furlong said in the latest earnings call.

"We have considerable cash on hand, negligible debt, streamlined inventory, and a path to full-year profitability," the CEO added.

Following the earnings report's release, GameStop, a meme stock that gained popularity on Reddit's r/WallStreetBets community, had its share prices rise by about 50% in after-hours trade. In premarket trading, GameStop shares are up 40.8% to $24.86 a share after concluding 4.6% higher on Tuesday.

GameStop's Meme Stock Status in 2021

Back in 2021, the entire internet witnessed the "meme stock" surge, which was propelled by a group of independent investors who collaborated through platforms like Reddit and helped increase the stocks of certain faltering firms, most notably GameStop and AMC.

Read Also: CryptoWatch: FTX's Case in Court and India's Investigation on Money Laundering via Cryptocurrency

Retail investors boosting the so-called meme stocks on the WallStreetBets subreddit were substantially accountable for GameStop's traction in 2021. 

Significant changes in the share prices of companies like GameStop and movie theater operator AMC were caused by the forum. The share price of GameStop increased by around 1,000% during the course of two weeks in January 2021.

The share prices of GameStop have subsequently decreased, although they are still unstable. Shares have down 4.4% so far this year.

Many experts have questioned whether GameStop's current valuation is acceptable, raising concerns about the company's profitability. 

However, GameStop appears to be heading in the right way and advancing toward long-term profitability, according to the company's most recent financial report.

r/WallStreetBets Reacts

Members of the Reddit forum r/WallStreetsBets dig that GameStop is in a position to take over the recently defunct Credit Suisse.

According to some community members, GameStop's recent turnaround is big enough to provide the firm with the financial power needed to buy out a faltering Credit Suisse. 

It is worth mentioning that Credit Suisse has just been taken over by UBS for £2.46 billion, which underscores the extent of its financial troubles.

For some users, it is hard to grasp that just a year ago, GameStop was teetering on the brink of collapse, with many investors betting against the company's future.

Stay posted here at Tech Times.

Related Article: Australian Regulator Orders Reports on Banks' Exposures to Crypto Following SVB Implosion