GameStop shares plunge 20% after Bitcoin purchase – What’s behind it?

GameStop shares plunge 20% after Bitcoin purchase – What’s behind it?

On Wednesday, GameStop, the popular video game retailer, announced that it had acquired 4,710 Bitcoin worth $513 million. However, this decision led to a dramatic decline in GameStop shares, which fell almost 20 percent. Before the announcement, the share price was $35.8 and fell to $29.5. The development surprised many investors as they had higher expectations for the use of cash, which stood at $4.8 billion as of February 1.

Buying Bitcoin is part of a larger strategy that GameStop launched in late March. Inspired by strategies of well-known personalities such as Michael Saylor, the company plans to use part of its cash reserves for Bitcoin acquisition. At the Bitcoin 2025 Conference, GameStop CEO Ryan Cohen clarified the view that Bitcoin and gold can act as a hedge against currency devaluation.

Strategic considerations and challenges

GameStop is currently exploring not only Bitcoin, but also other cryptocurrencies as potential investments. These considerations are part of an effort to explore alternative asset classes to develop new business strategies. Part of the strategy behind these investments is to adapt to the changing consumer habits that the company is currently struggling with. These efforts will be closely watched, particularly since Cohen joined the board in 2021.

Following the announcement, GameStop's share price jumped up to 20 percent in after-hours trading as investors showed positive reactions to the potential investments in Bitcoin. However, whether these strategies align with the company's long-term plans is still up for debate. A final decision on the investments has not yet been made.

Regulatory uncertainties and previous initiatives

GameStop has previously launched digital wallets to store and manage cryptocurrencies and NFTs, but discontinued this service in 2023 due to regulatory uncertainties. These crypto strategy proposals and setbacks reflect the challenges GameStop faces as the company attempts to modernize its retail strategy.

GameStop’s relationship with the Bitcoin community is particularly striking. The decision to buy and hold Bitcoin shows that GameStop is willing to proactively engage with the crypto market despite the company facing challenges. While Keith Gill, known for the famous GameStop short squeeze in 2021, has not yet commented on Bitcoin strategy, the company remains a central topic in discussions surrounding meme stocks and their future.

Amid these developments, Bitcoin price is currently recording $96,761.33 with an increase of 0.75% in the last 24 hours. GameStop's situation highlights growing efforts to view Bitcoin as a potential lifeline in uncertain times, particularly among so-called zombie companies.