Dec 7 (Reuters) - GameStop shares fell 7% before the bell on Thursday on signs that it will take longer for the brick-and-mortar videogame retailer to stem a revenue decline due to tough competition and weak demand.

Once a meme-stock darling, the company's third-quarter revenue fell and missed market expectations, underscoring the turnaround challenge faced by top investor Ryan Cohen, who became CEO and chairman in September.

"Fundamentally the business needs a radical rethink," said Russ Mould, investment director at AJ Bell.

"GameStop faces intense competition from the likes of Amazon and Ebay, and it needs to make its large store estate more appealing, which could cost a significant amount of money."

Shares of the company have lost nearly a fifth of their value this year after shedding 50% in 2022 compared with the multifold growth seen during the pandemic.

The company has in recent months slowed its aggressive shift to e-commerce and instead relied more on brick-and-mortar stores where customers can also pick up online orders.

It has also sharpened its focus on cost controls, helping cut expenses nearly 24% in the quarter. That helped its adjusted earnings per share to break even, compared with expectations of 9 cents loss.

"Costs remain a bright spot for GME," Jefferies analysts said, pointing to a 156 basis point rise in gross margins that was driven by lower freight expenses.

But they pointed to the 14% decline in the collectibles business as a concern, saying it could be driven by inventory-related reasons and broader demand weakness.

The current average recommendation for GameStop is "sell," according to five analysts polled by LSEG. The median target price is at $10.50, down from $13 a month ago.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Arun Koyyur)