- GameStop shares plunged over 22% on March 27 after the company revealed plans to invest in Bitcoin using funds from a US$1.3B convertible bond sale.
- Investors, led by analyst Bret Kenwell, expressed concerns over an unclear long-term strategy and potential risks to GameStop’s core retail operations.
GameStop shares tumbled more than 22% on March 27—the worst single-day drop in nearly a year —after the company announced a surprise move to invest in Bitcoin (BTC) using proceeds from a US$1.3B (AU$2.07B) convertible bond sale.
Although the crypto investment initially sparked excitement among retail traders, investors soon raised concerns about its impact on the company’s core retail operations and overall strategy.
Bret Kenwell, an investment analyst at eToro, noted that investors remain wary due to unclear long-term plans. He highlighted that the firm’s shift toward Bitcoin —financed by interest-free debt— adds another layer of risk.
Kenwell told Reuters:
Investors are not necessarily optimistic on the underlying business. (…) There are question marks with GameStop’s model. If bitcoin is going to be the pivot, where does that leave everything else?
Bret Kenwell, investment analyst at eToroHe further questioned GameStop’s timing:
Why did GameStop wait so long if they were going to go down this road? Six months ago, nine months ago would have made a lot more sense.
Bret Kenwell, investment analyst at eToroRelated: Hyperliquid Delists Perpetual Futures for JELLY, Drawing Industry Criticism
“Letter Received”, Says CEO Cohen
On Tuesday, GameStop updated its Investment Policy to include “certain crypto-currencies, including Bitcoin”, according to the company’s 2024 annual report filed with the SEC after market close.
The board approved the change unanimously on March 18. The filing noted that GameStop has not set a maximum limit on the amount of Bitcoin it may acquire and reserves the right to sell any Bitcoin it holds.
Earlier speculation was fueled when CEO Ryan Cohen posted a photo with Michael Saylor at Mar-a-Lago, sparking discussions about a potential shift toward Bitcoin investments.
Shortly thereafter, Strive Asset Management CEO Matt Cole sent a letter urging GameStop to deploy a portion of its nearly US$5B (AU$7.95B) cash reserve to purchase Bitcoin. Cohen’s follow-up tweet, “Letter received”, intensified the market buzz.
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