GameStop Video Game Business Has 'No Potential For A Rebound': Analyst Says Bitcoin Investment Not Enough

by Chris Katje Benzinga Staff Writer

Zinger Key Points

GameStop's investment in Bitcoin could lead to more volatility of the company's valuation, an analyst says after Q1 results.
Aside from Bitcoin, the analyst says there aren't many positives for the video game retailer.
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Things aren’t looking great for GameStop Corporation GME, if you ask Wedbush Securities’ Michael Pachter.

The video-game retailer’s Bitcoin investments probably won’t inspire hordes of investors to pile into its stock, while there are no signs of a potential recovery in its core business, Pachter suggested in a research note published Wednesday. The analyst maintained an Underperform rating on GameStop with a $13.50 price target.

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.

GameStop reported first-quarter revenue of $732.4 million on Tuesday, missing analyst estimates of $754.24 million. The company reported first-quarter adjusted earnings of 17 cents per share, beating analyst estimates of four cents per share, according to Benzinga Pro. The company said it had purchased 4,710 bitcoins between May 3 and June 10 using cash.

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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 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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