GameStop shares plunged over 15% on March 27, posting their sharpest single-day decline in nearly a year.
The drop comes less than a day after the company revealed a surprise move to invest in Bitcoin using proceeds from a $1.3 billion convertible bond sale. Despite initial optimism, the announcement raised fresh doubts about the future of its retail operations and long-term strategy.
The company’s stock, which had surged a day earlier amid retail trader excitement, quickly reversed course after investors digested the implications of GameStop’s latest shift in direction.
Store closures
Alongside the crypto announcement, GameStop confirmed plans to shutter a “significant number” of additional physical stores this year. The move signaled continued difficulties in its core retail business despite previous turnaround efforts to revitalize its operations.
Bret Kenwell, an investment analyst at eToro, told Reuters that investors are concerned about the firm’s lack of clarity about its long-term plans. He further stated that it’s unclear how the pivot to Bitcoin will affect the rest of its business.
The combination of crypto speculation and store closures left many investors uneasy about the company’s priorities and long-term prospects.
GameStop intends to take on debt without paying interest to bet on Bitcoin’s long-term appreciation. If successful, it could massively boost the company’s balance sheet — but if Bitcoin’s price falls, the company will have exposed itself to even greater risk.
The decision echoes a similar strategy used by Strategy, which has transformed itself into a prominent Bitcoin holding company. However, GameStop’s late entry into the digital asset space sparked further skepticism.
Questionable timing
Bitcoin prices have climbed nearly 27% since November’s US presidential election, though they remain below their record highs amid a mixed macroeconomic backdrop.
Analysts have questioned why GameStop waited until now to commit to a Bitcoin strategy. Kenwell noted that it would have made “a lot more sense” if the firm had decided to adopt Bitcoin “six to nine months ago.”
With the losses on March 27, GameStop stock is now down more than 23% for the year, deepening investor concerns about the company’s shifting identity and its ability to chart a clear path forward.
The significant fall in the share price indicates how little confidence the market has in the pivot — especially given the lack of a clear operational strategy to back it up.
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