GameStop (GME) Tumbles 23% After Revealing Bitcoin Investment Plan

GameStop (GME), the video game store chain, saw its stock tumble over 23% to $21.77 by Thursday midday, wiping out all the excitement from the day before

GameStop (NYSE:GME) shares tumbled over 23% to $21.77 by Thursday midday, wiping out all the excitement from the day before when it spiked on news of a bold new plan.

The company revealed it’s issuing $1.3 billion in special bonds that don’t pay interest and won’t mature until 2030, all to buy Bitcoin (BTC) and stash it as a backup asset, much like some big companies do with cash. This move sparked a frenzy among small-time traders who love this “meme stock” for its wild swings.

However, the mood soured quickly as doubts crept in about whether this Bitcoin bet can really save a retail business that’s been struggling to stay afloat. The timing of this shift is also raising eyebrows.

Bitcoin’s price has jumped nearly 27% since the presidential election in November, but it’s still way off its all-time highs, and the crypto market’s future looks shaky with the economy in flux.

Investment expert Bret Kenwell at eToro told Reuters that he wonders why GameStop didn’t opt for this idea sooner, like six or nine months ago, when Bitcoin was cheaper and the move might have carried more weight.

This move sees GameStop copying a strategy from Strategy (MSTR), a big Bitcoin holder that’s treated like a stand-in for the cryptocurrency itself. But with GameStop also planning to shut down a “significant number” of stores this year, it’s clear the brick-and-mortar side of things isn’t getting any healthier.

This leaves investors skeptical about what’s next for the company. Confidence isn’t exactly soaring with WeFi decentralized bank's Agne Linge noting that GameStop’s big Bitcoin announcement hasn’t done much to lift the broader crypto market’s spirits.

Meanwhile, the stock’s 29% drop this year shows the mood on Wall Street isn’t much better.

Kenwell adds that people aren’t sold on GameStop’s core business anymore, and this pivot to Bitcoin feels more like a Hail Mary than a solid move to fix the company’s issues.