GameStop Shares Fall 11% After $513 Million Bitcoin Purchase

GameStop (GME) recently made a significant investment by purchasing 4,710 Bitcoins, valued at approximately $513 million. This move was intended to diversify its treasury holdings and potentially hedge against market volatility. However, the market's reaction to this announcement was not as enthusiastic as expected. Instead of a surge in stock price, GameStop's shares fell nearly 11% to close at $31.21, indicating a "sell-the-news" moment.

CEO Ryan Cohen, who has been a vocal advocate for Bitcoin, presented a strong case for the cryptocurrency at the Bitcoin 2025 conference. He highlighted Bitcoin's advantages over gold, including portability, verifiability, scarcity, and growth potential. Despite Cohen's compelling arguments, the market seemed more concerned about the lack of a clear business plan for GameStop. Investors questioned why the company would allocate half a billion dollars to Bitcoin without a more concrete strategy for operational growth.

GameStop's core business remains a legacy retailer in a shrinking niche, facing declining sales and a pivot strategy that has yet to fully materialize. The Bitcoin purchase does not address these fundamental issues, and some investors view it as a distraction rather than a strategic move. This sentiment is echoed by the market's reaction to similar moves by other companies, such as Trump Media, which also saw a significant drop in shares after announcing a Bitcoin treasury plan.

Analysts have expressed skepticism about GameStop's Bitcoin pivot. Michael Pachter of Wedbush has given GameStop a "Moderate Sell" rating and a price target of $13.50, implying a steep downside from current levels. Pachter points out that while GameStop has substantial cash reserves, there is no clear plan for how this money or the new Bitcoin holdings will revitalize the company's business. This lack of a clear strategy has raised concerns among investors about the long-term viability of GameStop's Bitcoin investment.

Despite the initial excitement among retail investors, the market's current lack of enthusiasm suggests that investors are waiting for more concrete evidence of the strategy's success. GameStop's strategic shifts, including its investment in Bitcoin and store closures, continue to influence its stock performance. As the company navigates its transformation, the market will be closely watching to see how these strategic shifts play out in the long term. The Bitcoin purchase may have reignited interest among some retail investors, but the overall market sentiment remains cautious, highlighting the uncertainty surrounding the long-term benefits of this move.