Things aren’t looking great for GameStop Corporation (NYSE:GME), if you ask Wedbush Securities’ Michael Pachter.
The name that defined the meme-stock era has slumped almost 19% from a one-year high reached at the end of May, and traded at around $29 on Wednesday. At the height of that viral investing trend in 2021, the stock had surged to levels above $120.
Read Also: This New ETF Aims To Turn GameStop’s Wild Moves Into Cash
Bitcoin Strategy May Not Win Over Stock Investors
GameStop's purchase of 4,710 bitcoins on May 28 for around $500 million was one of the highlights in Pachter's note.
The analyst said GameStop has gained around $8 million on its Bitcoin purchase since late May, but the company's value remains around $12.50 per share based on cash, securities and cryptocurrency. GameStop's Bitcoin holdings and value will be volatile moving forward, he added.
"GameStop is following the MicroStrategy playbook," Pachter said referencing Strategy (NASDAQ:MSTR) buying up large amounts of Bitcoin for its balance sheet.
The analyst says MicroStrategy trades at less than 2x the value of its Bitcoin holdings.
"It is difficult to understand why any investor would be willing to pay more than 2x cash value for the possibility of GameStop converting more of its cash into Bitcoin, especially since these investors could invest in Bitcoin or a Bitcoin ETF themselves," he wrote.
‘No Potential For A Rebound’
Aside from its Bitcoin investment, Pachter said there are minimal positives for the video game retailer.
"GameStop's foray into the trading card business appears to be the only recent business venture to see modest success."
Pachter said he sees "no potential for a rebound" in GameStop's core video game business, which likely saw a small positive bump from Nintendo Switch 2 sales "before resuming revenue declines."
"Despite a complete lack of a clear strategy, GameStop has consistently capitalized on the existence of ‘greater fools' willing to pay more than twice its asset value for its shares – and so far, they've been correct."
Pachter said GameStop's stock price is at a level that "overlooks the many challenges ahead."
GME Price Action: GameStop stock is down 3.9% to $28.99 on Wednesday versus a 52-week trading range of $18.73 to $35.81. GameStop stock is down 7.5% year-to-date in 2025.
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