GameStop (GME) shares climbed about 5% on Monday after the video game retailer announced preliminary second-quarter results, saying it expects a boost in Q2 profit driven in part by its stake in eBay (EBAY).

Preliminary Results

GameStop said it expects net income of $290 million to $310 million for its quarter ending Aug. 1, up from net income of $168.6 million in the prior year's second quarter.

The company converted its eBay derivative position into eBay shares, generating approximately $238 million in gains. GameStop now owns 43.4 million shares of eBay common stock, valued at more than $4.9 billion.

The eBay stake is doing the heavy lifting for the company's bottom line, as revenue is expected to decline. GameStop's sales are forecast to come in between $780 million and $800 million for the quarter, down from $972.2 million in the year-ago period. The expected revenue decline continues a longer-running trend for the retailer, whose core business of selling new and used physical video games has shrunk as consumers shift to digital downloads — a dynamic that has put growing weight on the company's investment holdings to support earnings.

The company expects to release its complete second-quarter results on Sept. 8, when investors will be able to see fuller detail on operating performance alongside the investment gains.

Additional Context

GameStop released the preliminary numbers on Monday in connection with an amendment to its private exchange of $1.4 billion in convertible notes, which was revealed earlier this month.

GameStop stock is down 11% year to date. Earlier this year, the company made an unsolicited $56 billion bid to acquire eBay, a move that was later rejected by the online marketplace.

Ines Ferre is a senior business reporter for Yahoo Finance.

Source: Yahoo Finance