The Grapevine, Texas-based company reported third-quarter revenue of $1 billion, a 30.2% year over year decrease, with a net loss of 53 cents per share.
Analysts were expecting GameStop to report revenue of $1.09 billion with a net loss of 85 cents per share.
"Our third quarter results were in-line with our muted expectations and reflected operating during the last few months of a seven-year console cycle and a global pandemic, which pressured sales and earnings," said CEO George Sherman.
GameStop shares fell 12% to $14.96 in after-hour trading Tuesday.
The company was able to increase e-commerce sales by 257% in the quarter as it looks to transform its business model amid a shift in how consumers buy their video games.
While the company continues to suspend its guidance to coronavirus-related uncertainty, it does expect to realize positive comparable store sales results and profitability in the fourth quarter.
The company finished the quarter with $602.6 million in cash with $269.5 million in short-term debt and another $216 million in long-term debt on its balance sheet.
Earlier this year GameStop was one of the most heavily shorted stocks due to increased competition, including Apple's new Arcade gaming service.
In October, the stock got a boost after GameStop announced it entered into a multiyear strategic partnership agreement with Microsoft (MSFT) - Get Report that the videogame retailer said would expand its product offerings and enhance its retail infrastructure.
Under the agreement, GameStop will standardize its back-end and in-store solutions on Dynamics 365, Microsoft’s portfolio of cloud-based business applications and customer data platform.