GameStop (GME) plans to close down a “significant number” of stores as the struggling video game retailer switches focus. The exact number of stores to be closed is unknown, but the company has continued to shrink its footprint as demand for its services fades. That’s partially due to the rise in digital sales of video games compared to GameStop’s physical sales.
While GameStop has tried to insulate itself from this change by transforming its stores into homes for pop culture merchandise, the strategy hasn’t worked. That resulted in the retailer shuttering roughly 1,000 locations last year. This leaves it with 3,203 storefronts around the world, compared to its peak of 6,000 locations about 10 years ago.
What’s Next for GameStop?
Alongside its store closure announcement, GameStop revealed it will start investing in Bitcoin (BTC). This shift isn’t too surprising as the video game retailer has courted the crypto market in the past, including operating a non-fungible token (NFT) marketplace for a short time.
However, this change appears more permanent, making GameStop more of a Bitcoin investment vehicle than a video game retailer. Depending on how this strategy works out for it, the company may give up on its physical retail locations entirely to focus on Bitcoin investments.
It looks like investors in GME stock might prefer that. The company’s stock was up 11.79% on Wednesday morning after it announced the store closures and Bitcoin investment plans. This could be the move it needs to stay relevant as interest in meme stocks wanes.
Is GME Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus estimate for GameStop is Moderate Sell, based on a single Sell rating over the last three months. Wedbush analyst Michael Pachter has a Sell rating and a $10 price target for GME stock, representing a potential 65.28% downside.
