Is GameStop the Next Berkshire Hathaway?

Warren Buffett purchased a controlling stake in Berkshire Hathaway in 1965 and made the company the namesake and a foundational component for what would become the most successful holding company in history. At the time of Buffett's purchase, Berkshire was a struggling textiles company -- but what came next is the stuff of legend in the investing world.

GameStop (NYSE: GME) CEO Ryan Cohen is aiming to use the foundations of a struggling video game retailer to build a thriving holding company, and his plan has invited comparisons to the successful playbook utilized by Buffett. Could GameStop really be the next Berkshire Hathaway?

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Today's GameStop is radically different

In its fiscal 2025 third quarter -- which ended Nov. 1 -- GameStop's revenue declined 4.5% year over year to $821 million. Meanwhile, its trailing-12-month revenue is down 34.5% over the last five years. On the other hand, slipping revenue for the retail business hardly tells the full story.

GameStop has already gone through a radical transition. The meme-stock craze allowed it to transform its balance sheet, paving the way for it to become a hugely different company. When meme stock momentum and short-squeeze trading pushed GameStop stock up to dizzying levels, the company made the smart move to raise funds by selling new shares.

The company closed out its fiscal Q3 with $8.8 billion in cash and short-term equivalents on its books -- up from $4.6 billion at the end of the prior-year period. Now, it's gearing up to put its cash pile to use and make a major acquisition.

While GameStop is down roughly 69% from the peak reached at the height of the meme stock mania, the company has arguably never looked stronger over the last decade. Its retail businesses look poised to continue declining, but that's not really the story for the stock anymore.

With the company's market capitalization currently sitting at roughly $10.7 billion, GameStop's cash position accounts for the large majority of its valuation. Investors are also seemingly assigning a meaningful valuation premium to it based on the assumption that Cohen and his team will make smart acquisitions and investments.

While calling the company the next Berkshire Hathaway likely has the makings of an overstatement, GameStop increasingly has more in common with the famous holding company than with other struggling retailers. Expecting GameStop to deliver returns in line with what Berkshire Hathaway has delivered over the last 50 years probably isn't realistic, but Cohen has done an impressive job transforming the business -- and the stock has feasible avenues to delivering market-crushing performance from here.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.