Shares of GameStop fell on Thursday, erasing gains the company made earlier this week after announcing it was pivoting from selling video games to investing in Bitcoin.
The company said Tuesday its board voted unanimously to raise $1.3 billion to purchase Bitcoin, while simultaneously closing a “significant number” of retail stores. Although the news was greeted with a 14% same-day stock bump, the initial excitement faded quickly. On Thursday, shares of the embattled video game retailer were down 23% over the past 24 hours.
GameStop’s new plan involves investing a portion of the company’s “cash or future debt and equity issuances” in Bitcoin, according to an SEC filing. The company will raise money for Bitcoin purchases by offering convertible senior notes—a combination of debt and equity financing—to their investors. The goal of the new investment strategy is to “provide sufficient liquidity to meet the day-to-day financial obligations of the Company, and to optimize investment returns,” the company said in the SEC filing.
GameStop has been struggling for years, and played a starring role in one of the most bizarre business stories of the decade thus far, after the company’s stock unexpectedly skyrocketed in 2021 thanks to a popular uprising of retail investors. But despite the wild share-price boost (which was later turned into a movie), the company is confronting a long-term shift in customer appetites over the past decade from physical to digital video games. GameStop reported a 28% decrease in sales from 2023 to 2024, falling from $5.3 billion to $3.8 billion, according to an SEC filing from Tuesday, and it closed a quarter of its locations within the last year.
The company did not immediately respond to a request for comment from Fortune.
GameStop isn’t the only company to change its business model to focus more on crypto investing. Software company Strategy adopted Bitcoin as a reserve asset in 2020, and has seen its stock price surge over 3,000% in the last five years after amassing 500,000 Bitcoins. The company’s stock has become attractive to investors who want access to Bitcoin’s price movements, but don’t want to hold the currency directly.
But while that plan has worked out for Strategy so far, it may not work for other companies. Michael Patcher, an analyst at investment management firm Wedbush Securities, told Fortune that by comparison, GameStop’s stock will be more expensive and offer less exposure to Bitcoin.
“There is an opportunity for corporations to buy cryptocurrency that doesn’t exist for individual investors, so that explains some of Microstrategy’s appeal,” Patcher said, referring to Strategy by its old name. “However, Microstrategy trades at a lower premium to its liquid assets than GameStop trades.”
