GME Stock: GameStop Corp. (NYSE: GME) stock plummeted 18% on Thursday, marking one of its steepest single-day declines this year, after the company revealed a bold shift in strategy: using proceeds from a $1.75 billion convertible bond offering to purchase additional Bitcoin.
The struggling video game retailer disclosed that it recently acquired 4,710 Bitcoins between May 3 and June 10, a stake valued at over $500 million. The latest funding round is intended to expand that position, signaling GameStop’s deepening commitment to cryptocurrency as part of its long-term treasury policy.
Pivoting to Bitcoin as Core Strategy
GameStop’s pivot mirrors the approach taken by Strategy (formerly MicroStrategy), which has invested billions in Bitcoin using various securities, including convertible debt. CEO Ryan Cohen defended the move, citing macroeconomic risks and emphasizing Bitcoin’s decentralized nature and limited supply as reasons for holding it as a reserve asset.
However, analysts and investors remain skeptical. Critics argue that this pivot lacks strategic alignment with GameStop’s core business and could amplify financial risk. Wedbush analyst Michael Pachter reiterated his underperform rating, saying the retailer is leveraging hype and comparing the move to relying on “greater fools” to drive valuation.
Financial Performance Raises Questions
The announcement follows a mixed fiscal Q1 report. GameStop reported earnings per share (EPS) of $0.09, beating estimates, but revenue fell 17% year-over-year to $732.4 million, missing consensus expectations. This continued decline in core business performance has many questioning whether a cryptocurrency-heavy investment strategy can deliver sustainable returns.
Adding to investor concerns, GameStop stock is now down approximately 26% year-to-date, despite a recent 30% gain over the past three months driven largely by speculative trading activity.
Outlook Remains Uncertain
While some traders are optimistic that Bitcoin exposure could revive interest in the stock, others see it as a risky distraction from necessary operational improvements. The company’s future may now hinge more on cryptocurrency markets than consumer demand for physical and digital games.
As of now, only one Wall Street analyst actively covers the stock, highlighting the uncertainty surrounding its long-term direction.