GameStop, once a movie-worthy drama about retail investors' uprising against Wall Street hedge funds in January 2021, has undertaken a strategic transformation as it struggles to adapt to the digital gaming revolution. The Texas-based brick-and-mortar retailer that became synonymous with the WallStreetBets phenomenon and reached an all-time high of $80 per share has seen its stock slide far below those peaks, trading around $35 at recent highs. The company that once represented the power of retail investors to squeeze institutional short-sellers now finds itself desperately seeking new revenue streams as its core brick-and-mortar business continues to haemorrhage customers to digital downloads and online gaming platforms.
The company's latest pivot involves cryptocurrency, with its massive $515 million Bitcoin purchases, storing 4,710 bitcoins for its treasury reserves. This move could be GameStop's most aggressive struggle to diversify away from its failing retail operations, following the board's March approval to use Bitcoin as a treasury reserve asset. The crypto strategy mirrors that of companies like MicroStrategy and GameStop's attempt to appeal to its crypto-enthusiastic retail investor base, though this isn't the company's first foray into digital assets when it previously launched and then shuttered a digital wallet project in 2022 due to regulatory insecurity.
Even with these strategic initiatives, GameStop's fundamental business metrics continue to deteriorate. First-quarter revenue fell 17% to $732.4 million, falling short of analyst expectations of $754.2 million, while hardware and accessories sales dropped 32%. The company has closed nearly 600 U.S. stores in 2024 alone and plans to continue with a "significant number" more in 2025, while also divesting its Canadian operations and preparing to sell its French subsidiary. While GameStop managed to post a $44.8 million net profit compared to a $32.3 million loss the previous year, this improvement came largely from cost-cutting measures and asset sales rather than operational growth, leaving investors sceptical about whether the Bitcoin gambit can truly offset the company's retail decline.
Source: Reuters, Cryptopolitan
Photos: Unsplash
