GameStop, the embattled online game retailer, introduced its first giant acquisition of Bitcoin on Wednesday, disclosing a purchase order of greater than $500 million price of the foreign money as a part of the corporate’s try to spice up its ailing income.
GameStop has bought 4,710 Bitcoins, in response to a press release. However whereas related investments have been a boon for different firms, GameStop has but to reap the advantages from its pivot to crypto.
After an preliminary bump in pre-market buying and selling following the announcement, GameStop’s inventory tumbled 10% on Wednesday morning as buyers expressed dismay with the corporate’s new monetary technique.
The multi-million greenback buy follows an earlier announcement from the corporate that it could shift its technique away from promoting video video games to investing in crypto. The preliminary plan concerned elevating $1.3 billion by providing debt financing to buyers within the type of convertible notes, in response to an SEC submitting from March. The aim of the brand new technique is to “present ample liquidity to fulfill the day-to-day monetary obligations of the Firm, and to optimize funding returns,” the submitting stated.
Gamestop’s shares slid 23% on the information, however the firm went on to lift $1.5 billion in a non-public providing to buyers in April, cash particularly earmarked for Bitcoin purchases.
The shift to crypto investing appears to be an effort to emulate Technique (previously often known as Microstrategy), a veteran software program firm that pivoted to Bitcoin in 2020 and has seen its inventory value enhance 2,700% over the previous 5 years. Different firms are additionally making related strikes, together with Twenty One Capital, a brand new entity created through a partnership with Cantor Fitzgerald and a number of different firms, and Trump Media and Know-how Group, a media firm backed by the U.S. president’s household.
However Vitaliy Shtyrkin, chief product officer at crypto fee processor B2BINPAY, argues that Bitcoin might not be the treatment all GameStop is hoping for. The foreign money’s trademark volatility, which makes it engaging for Technique buyers, introduces new dangers to GameStop buyers, and its inventory is already affected by declining online game gross sales, he tells Fortune.
“Bitcoin is thrilling for a loyal investor base, nevertheless it distracts from core fundamentals: if crypto costs drop, GameStop might simply find yourself in a double-bind,” says Shtyrkin.
Over time, GameStop has struggled to maintain up with a shift in demand from bodily video video games to digital ones. Between 2023 and 2024, GameStop’s gross sales decreased by 28%, falling from $5.3 billion to $3.8 billion. Consequently, the corporate was compelled to shutter 1 / 4 of its places inside the final 12 months and plans to shut a major variety of shops in 2025.
GameStop’s shift to Bitcoin will not be the primary stunning twist within the firm’s historical past. The online game retailer grew to become often known as a “meme inventory” in 2021 after shares of the corporate unexpectedly skyrocketed after a band of Redditors made it a viral pattern to spend money on it.
This story was initially featured on Fortune.com