Why GameStop (GME) Stock Plunged 20% After Confirming Its First Bitcoin (BTC) Purchase

The trend of establishing strategic Bitcoin reserves often benefits companies immediately, most notably a rise in stock prices. But that's not what happened with GameStop's stock.

The trend of companies establishing strategic Bitcoin reserves has often benefited them immediately, most notably with an increase in their stock prices.

However, that wasn’t the case with GameStop (NYSE:GME) and its stock.

The price of the stock has dropped by 20% since the company confirmed its first Bitcoin purchase on May 28.

So why did the market react so negatively to GameStop’s move?

Why Investors Responded Poorly to GameStop's Fundraising

In late May, GameStop drew attention by spending $513 million to buy 4,710 BTC. This marked a bold step for the company to diversify its portfolio. It became the 13th-largest public holder of Bitcoin.

Later, the company announced a plan to offer $1.75 billion in senior convertible notes privately. This move is expected to strengthen GameStop’s capital base. But the announcement did not say what the company would use the funds for.

Many investors assumed that the new capital might go toward further Bitcoin purchases. After the announcement, GameStop’s stock dropped 6%, falling from over $30 to $28.50.

From the price on May 28—the day GameStop revealed its Bitcoin acquisition—the stock has declined by 20%.

The Q1 2025 earnings report from GameStop added to the pressure. The company reported a 17% year-over-year revenue drop, falling short of analyst expectations.

“Net sales were $732.4 million for the period, compared to $881.8 million in the prior year’s first quarter,” the company said in its report.

This lackluster performance and the uncertainty over the raised capital have dampened investor enthusiasm for GameStop’s stock.

In contrast to GameStop, Metaplanet’s shares soared by 5,000% following an ambitious Bitcoin treasury strategy. A positive earnings report bolstered this stock rally. It highlights the importance of Bitcoin accumulation and new revenue growth to sustain the stock’s upward momentum.

GameStop’s current situation reflects the tension between its ambition to innovate and the pressure from traditional markets. Accumulating Bitcoin could lead to major gains if the crypto market surges. However, it also exposes the company to risk, especially as investor trust erodes.

Recently, Sygnum warned that Bitcoin acquisition vehicles relying on leveraged risk could cause market instability. Such strategies could trigger liquidations and even insolvencies.