Shares of GameStop (GME) plummeted almost 25% on Thursday after the video game retailer announced plans to raise $1.3 billion through convertible senior notes to invest in bitcoin (BTC). The move marks a dramatic pivot in the company’s strategy, signaling a shift toward cryptocurrency as a treasury reserve asset.

GameStop Embraces Bitcoin as Treasury Asset

The company's board has unanimously approved the policy update, officially allowing Bitcoin to be held on the company’s balance sheet. The decision follows mounting speculation over GameStop’s crypto ambitions, which intensified after a February 8th post by CEO Ryan Cohen. 

In that post, Cohen shared a picture of himself with MicroStrategy (MSTR) CEO Michael Saylor, a noted Bitcoin advocate whose company holds over 447,000 BTC, according to filings earlier this year.

While MicroStrategy’s Bitcoin strategy has seen strong results — its stock has risen more than 84% over the past year, boosted by the recent crypto rally — analysts are expressing skepticism about GameStop’s move.

Wedbush analyst Michael Pachter cautioned that the strategy may not yield similar benefits for GameStop. “The company’s strategy, which has changed about six times in three years, is now to buy cryptocurrency and be just like MicroStrategy,” Pachter told Yahoo Finance earlier this week. “The problem with that thinking is MicroStrategy trades at about two times their bitcoin holdings. If GameStop were to buy all bitcoin with their $4.6 billion in cash and trade at two times [their bitcoin holdings], the stock would drop five bucks.”

Market Reacts Sharply as Earnings Slump

The reaction from the market was swift. After a modest gain of nearly 12% following the announcement of the board's approval to buy Bitcoin, shares reversed sharply once the financing details emerged. Investors expressed concerns over both the dilutive impact of the convertible notes and the high volatility of cryptocurrency holdings, particularly for a company that has struggled to maintain consistent business performance in recent years.

The announcement coincided with GameStop’s fourth-quarter earnings, which offered little reassurance. Net sales for the quarter fell to $1.28 billion, a 28% decline from the same period last year. On an annual basis, adjusted EBITDA dropped to $36.1 million, down from $64.7 million in the prior year, signaling continued weakness in the company’s core operations.

Despite ongoing efforts to reinvent itself, GameStop has cycled through multiple business models in recent years — from physical retail and e-commerce revamps to web3 gaming initiatives. The latest shift toward cryptocurrency as a core financial strategy appears to be another bold, high-risk maneuver.

As of now, the company has not disclosed how many bitcoins it plans to purchase or the timing of its acquisition. The proposed $1.3 billion raise via convertible notes has yet to be completed.

GameStop’s announcement adds to the growing trend of publicly listed companies experimenting with Bitcoin as a reserve asset. However, the market’s sharp response indicates that investor confidence remains fragile, especially when such a strategy is paired with declining revenues and a history of inconsistent execution.