GameStop (NYSE:GME) shares jumped ~12% in Wednesday’s session after the videogame retailer released its fiscal fourth quarter results. But the real buzz? A Bitcoin pivot. With a hefty $4.8 billion cash pile, the company is embracing Bitcoin as a treasury reserve asset.
GameStop’s move didn’t come out of nowhere. Last month, CEO Ryan Cohen set the rumor mill in motion by sharing a photo with Michael Saylor on X. Speaking of Saylor, his firm, Strategy, now holds over 447,000 Bitcoin, a bet that has sent its stock skyrocketing over 2100% over the past four and a half years.
Could GameStop stock be setting up for a similar trajectory? Too early to call, but this pivot is the latest chapter in GameStop’s ongoing reinvention as it battles headwinds in the retail gaming space.
“The company clearly understands its shareholder base,” Wedbush analyst Michael Pachter commented. “They (investors) want GameStop to take their money and invest in things like bitcoin, and the company is accommodating their wishes.”
And it’s not just about Bitcoin hype. Even Pachter, a long-time GameStop bear, gave credit where it’s due.
“We think it is important to note that the company has managed to trim its operating losses to almost breakeven, with a net operating loss of less than $10 million in each of the last two fiscal years,” Pachter noted.
The key, says Pachter, is that the company is prioritizing the most efficient stores, as GameStop closed approximately 1,000 locations in 2024 and announced its exit from Canada and France. Pachter appreciates management’s commitment to running the business efficiently, and given the quarter’s outcome, is more confident than ever that GameStop can attain breakeven results “in the foreseeable future.”
While Pachter thinks there’s an argument to be made that the quarter’s results “are not sustainable,” he admits he never anticipated GameStop would come close to achieving operating breakeven again.
“We were wrong, and it is clear that the company’s operations have some value, albeit not as great as its share price suggests,” Pachter summed up.
Indeed, the performance is not good enough for Pachter to change his Underperform (i.e., Sell) rating, although he does bump the price target from $10 to $11.5. Nevertheless, that figure suggests the shares are still overvalued by 61%. (To watch Pachter’s track record, click here)
Wall Street has been largely quiet on all things GameStop, with Pachter being the only recent analyst to weigh in. (See GME stock analysis)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.