GameStop Corp. announced that it reached its first quarterly profit after it endured a two-year period of losses leading to a spike in stock value.

Headquartered in Texas, GameStop is an electronics and gaming retail store that is known for selling CDs and video game consoles. With recent market trend shifts, the company has shifted its focus to making sales through its digital download store.

Sales of video games in the United States dropped by 5% in 2022, according to the market research company NPD Group Inc.

Another issue the retailer faces includes its large inventory, which is worth $629.9 million and kept in storage, as a result of mistakenly believing there was high demand.

GameStop’s struggles began when its stocks were infamously purchased by a group of Reddit users against institutional investors, disturbing the financial standings of Wall Street analysts. Through communication on the subreddit r/wallstreetbets, these users held on to these stocks, leading to losses of billions for hedge funds.

Regardless, the company’s results for the final quarter of the 2022 fiscal year included $48.2 million in net income and $2.23 billion in net sales. This overpowered the assumptions of analysts who forecasted the net sales to reach only $2.18 billion.

GameStop’s sales in collectibles rose by 12% and sales in hardware and accessories rose by 12% and 4.6%. The collectibles section is where GameStop intends to focus as it seeks to boost its sales.

Selling, general and administrative expenses made up 20.4% of sales, in comparison to 23.9% for the same time during the previous fiscal year.

Net sales through the whole fiscal year reached about $5.93 billion, while the previous year’s was slightly higher at $6 billion.

Although the company did not provide an estimate regarding its financial health for this year, CEO Matt Furlong said during a conference call that “GameStop is a much healthier business today than it was in the start of 2021.”

Due to delays from the previous year’s gaming releases, pent up promotion for titles that include “Call of Duty: Modern Warfare II,” “Diablo 4” and a “Star Wars” game will be monitored.

Additionally, after activist investor Ryan Cohen became the executive board’s chairman in 2021, he sought cost-saving measures by launching mass layoffs and lowering general expenses. As a result, GameStop reported a cash balance of $1.39 billion.

Nonetheless, Wedbush Securities Managing Director Michael Pachter said that the lowering of expenses cannot be a permanent solution amid other issues, such as declining physical sales and shifting appeal over to online mobile and computer gaming subscriptions.

A partnership between GameStop and the cryptocurrency company FTX US in fall 2022 produced mixed results and ended after two months, following FTX’s declaration of bankruptcy.

During the premarket trading period, GameStop’s stock rose by more than 40% and closed at $18 on March 22, in comparison to the previous year’s high of $50.