GameStop shares sharply declined following the company's decision to invest in Bitcoin, sparking skepticism among analysts and investors.
Market reaction to GameStop plans
On March 23, GameStop shares plummeted by 22%, resulting in a $3 billion loss in market capitalization. This followed the news that GameStop planned to purchase Bitcoin using $1.3 billion in convertible debt proceeds. Earlier, following the March 25 announcement of its intention to add Bitcoin to its reserves, the company's shares had risen by 12%.
Analysts question GameStop's business model
Analysts are concerned about GameStop’s strategy. Brent Kenwell from eToro, in an interview with Reuters, remarked that investors are doubtful of GameStop’s business model's sustainability. 'If Bitcoin is going to be the pivot, where does that leave everything else?' inquires Kenwell.
Critical views on GameStop strategy
Analysts like Wedbush's Michael Pachter maintain a 'underperform' rating for GME stocks, believing they will decline ahead of the debt issuance completion. Additionally, Bitcoin critic Peter Schiff expressed the view that the company's strategy is not a sustainable long-term investment.
The future of GameStop’s shares and their Bitcoin investment strategy remains in question, drawing criticism from various experts.
