Wall Street punished GameStop on Friday, a day after the company posted weaker-than-expected earnings and margins.
The stock price was down more than 13 percent Friday afternoon.
Despite strong revenue and same store sales, GameStop's earnings per share fell just shy of estimates.
The video game retailer posted adjusted second-quarter earnings of 15 cents per share on revenue of $1.69 billion. Those results were mixed compared with Thomson Reuters consensus estimates of 16 cents per share on revenue of $1.64 billion.
Baird equity research analyst Colin Sebastian said a shift toward hardware sales and away from pre-owned products pressured profit margins.
CEO Paul Raines told CNBC's "Squawk Alley" on Friday that markets are missing some of the strength that GameStop could have going into the holiday season, when its AT&T stores will sell the next Apple iPhone and iPhone accessories.
"We're not happy with our stock price, and we're doing everything we can to move it," Raines said. "The iPhone 8 event, potentially, is a $250 billion event, so we like our odds in that space."
The company has been on what Raines calls a "diversification journey" over the past few years, as consumers have warmed to online marketplaces and digital downloads. Amazon, for instance, owns gaming platform Twitch.
GameStop's collectibles business — mostly licensed merchandise of Pokemon and Marvel characters — is gaining ground among adults who want a statue of their favorite characters on their desks, Raines said. The segment brought in only about $122.5 million during the quarter, but sales were up 36 percent. The company said it is bringing in a new senior vice president to oversee the collectibles business.
Nonetheless, the cycle of new hit video games and consoles is still a core part of GameStop's business. This quarter, GameStop managed to snag the leading market share of selling Nintendo's Switch devices, helping drive same store sales up 1.9 percent, better than the 4.8 percent decline analysts expected and especially strong overseas.
Raines said he expects excitement around that device to continue to give GameStop a foothold.
"I think the strength Switch tells us that there is a place for console gaming. It is the hottest launch we've ever had," Raines said. "Consumers are buying software from us, ... digital and physical software."