Meme stock GameStop surges 35% after it posted a surprise profit for the first time in 2 years

• GameStop reported a surprise profit in the fourth quarter of 2022, even though revenue fell.
• The video-game retailer's shares surged about 35% in early trading Wednesday,

Shares of GameStop, a meme stock popularized on Reddit's WallStreetBets forum, surged about 35% on Wednesday after the video game retailer posted its first quarterly profit in two years.

The company reported a profit of $48.2 million in the fourth quarter of 2022 — reversing a $147.5 million loss in the same period a year ago — despite a 1.2% decrease in revenue to $2.23 billion.

"GameStop is a much healthier business today than it was in the start of 2021," said Matt Furlong, GameStop's CEO, at the company's earnings call on Tuesday.

Shares in GameStop were up 35.1% at $23.84 apiece at last check, after closing 4.6% higher on Tuesday.

GameStop steered its way back into profitability by cutting costs and optimizing inventory in 2022, Furlong said. This included reducing the company's headcount and streamlining its operations.

The company is expected to continue to cut excess costs in 2023, including winding down operations in certain countries in Europe, per Furlong. It also aims to boost its higher-margin businesses such as collectibles and toys.

Furlong even said GameStop has "a path to full-year profitability."

GameStop skyrocketed in popularity in 2021 as retail investors used the WallStreetBets subreddit to identify and pump the so-called meme stocks.

Forum chatter produced huge swings in the share prices of companies like GameStop and movie theater chain AMC, with GameStop surging nearly 1,000% during a two-week period in January 2021.

This story was updated at 10:03 a.m. ET to reflect open session prices.