GameStop stock is surging after earnings, but there's a clear problem

It was not a clean fourth quarter for GameStop, despite the outpouring of investor affection.

GameStop stock was up 40% in premarket trading on Wednesday after the company posted its first quarterly profit in two years. The stock is the number one trending ticker on the Yahoo Finance platform.

GameStop's net profits tallied $48.2 million, a major swing from a net loss of $147.5 million a year ago.

At the same time, however, the company's sales fell 1.2% from the prior year to $2.23 billion amid continued pressure on software sales and more closed stores. Sales for 2022 dropped 1.4% year-over-year to $5.93 billion.

That suggests that GameStop's bottom line surprise was primarily fueled by a push from CEO Matt Furlong to slash costs throughout the organization after several ugly earnings prints.