GameStop, the embattled video game retailer, announced its first large acquisition of Bitcoin on Wednesday, disclosing a purchase of more than $500 million worth of the currency as part of the company’s attempt to boost its ailing profits.
GameStop has purchased 4,710 Bitcoins, according to a statement. But while similar investments have been a boon for other companies, GameStop has yet to reap the benefits from its pivot to crypto.
After an initial bump in pre-market trading following the announcement, GameStop’s stock tumbled 10% on Wednesday morning as investors expressed dismay with the company’s new financial strategy.
The multi-million dollar purchase follows an earlier announcement from the company that it would shift its strategy away from selling video games to investing in crypto. The initial plan involved raising $1.3 billion by offering debt financing to investors in the form of convertible notes, according to an SEC filing from March. The goal of the new strategy is to “provide sufficient liquidity to meet the day-to-day financial obligations of the Company, and to optimize investment returns,” the filing said.
Gamestop’s shares slid 23% on the news, but the company went on to raise $1.5 billion in a private offering to investors in April, money specifically earmarked for Bitcoin purchases.
The shift to crypto investing seems to be an effort to emulate Strategy (formerly known as Microstrategy), a veteran software company that pivoted to Bitcoin in 2020 and has seen its stock price increase 2,700% over the past five years. Other companies are also making similar moves, including Twenty One Capital, a new entity created via a partnership with Cantor Fitzgerald and multiple other companies, and Trump Media and Technology Group, a media company backed by the U.S. president’s family.
But Vitaliy Shtyrkin, chief product officer at crypto payment processor B2BINPAY, argues that Bitcoin may not be the cure all GameStop is hoping for. The currency’s trademark volatility, which makes it enticing for Strategy investors, introduces new risks to GameStop investors, and its stock is already suffering from declining video game sales, he tells Fortune.
“Bitcoin is exciting for a loyal investor base, but it distracts from core fundamentals: if crypto prices drop, GameStop may easily end up in a double-bind,” says Shtyrkin.
Over the years, GameStop has struggled to keep up with a shift in demand from physical video games to digital ones. Between 2023 and 2024, GameStop’s sales decreased by 28%, falling from $5.3 billion to $3.8 billion. As a result, the company was forced to shutter a quarter of its locations within the last year and plans to close a significant number of stores in 2025.
GameStop’s shift to Bitcoin is not the first surprising twist in the company’s history. The video game retailer became known as a “meme stock” in 2021 after shares of the company unexpectedly skyrocketed after a band of Redditors made it a viral trend to invest in it.
