Summary
GameStopstock fell over 10% following the company’s late May 2025 announcement of an enormous Bitcoin purchase valued in excess of $500 million. Investors appear to be largely displeased withGameStop’s cryptocurrency pivot, with some arguing the move adds to its problems without addressing any of the core—or even secondary—challenges that it’s facing.
GameStop’s business has been on a steady decline since the advent of the digital era, which saw consumer spending habits shift away from its bread and butter—physical game sales. Its prospects briefly improved during a January 2021 market rally that triggered a so-called short squeeze—a sharp price spike caused by an excess of short sellers who bet against the company rushing to cover their positions by buying its stock that they previously borrowed. GameStop emerged from the episode as a meme stock, but its fundamentals have seen little improvement in the years since.
Looking to diversify its assets, the retailer recently purchased 4,710 Bitcoin,announcingthe transaction on May 28. While the group did not elaborate on when exactly this took place, its announcement arrived just a week after Bitcoin had reached an all-time high of $111,000. Assuming the entirety of the purchase was completed sometime over the final week of May 2025, the retailer’s Bitcoin investment cost it over $500 million.GameStop stockbottomed out at $30.88 in the hours following its announcement—-a 13.7% drop. It kept sinking the following day, closing at $29.56.
Investors Have Been Skeptical of GameStop’s Bitcoin Bet for a While Now
The public markets' negative reaction to the cryptocurrency pivot did not come out of the blue. It was already signaled back in late March 2025, whenGameStop saw its stock plummeton the back of an announcement saying it would pursue major Bitcoin investments. While the share price has recovered since then, it would appear that investor sentiment on this issue hasn’t changed.
Why Are Public Markets Reacting Negatively to GameStop’s Bitcoin Purchase?
The skepticism surrounding the embattled retailer’s cryptocurrency investment is multifold. One of the core issues with its strategy that critics bring up is that it does nothing to address the number one issue that the company is facing: the erosion of its core business model. Asphysical game purchases continue to decline, so does GameStop’s sustainability. Buying Bitcoin does nothing to address this.
The secondary issue concerns the strategy itself: as a publicly traded company, GameStop is widely seen as an avenue for equity investment, not a proxy for speculative assets. By allocating a significant portion (~10.5%) of its cash reserves to Bitcoin, the company effectively conflates its corporate identity with a volatile commodity, thereby introducing unnecessary risk to shareholders who may not have signed up for such exposure. At the end of the day, anyone who believes in Bitcoin can just buy Bitcoin instead of paying a premium for a struggling video game retailer to do the same on their behalf.
