GameStop shares plunged nearly 19% in premarket trading Thursday, extending a sharp decline triggered by the company’s recent earnings report and a new convertible note offering. The video game retailer’s stock has been under pressure following a 17% year-over-year drop in first-quarter revenue, which fell short of Wall Street expectations and raised concerns about the company’s core business sustainability.
For the quarter ended May 3, 2025, GameStop reported revenue of $732.4 million, missing the consensus estimate of $754.2 million. Despite the revenue shortfall, the company swung to an adjusted profit of $83.1 million, or 17 cents per share, reversing a loss from the previous year.
However, this profit was down from $136.4 million reported in the prior quarter, signaling ongoing operational challenges. Hardware and software sales continued to decline, while collectibles revenue showed some resilience, but not enough to offset the overall downturn.
Adding to investor unease, GameStop announced a $1.75 billion convertible senior note offering, with an option for an additional $250 million. This debt issuance, carrying a 0% interest rate and maturing in 2032, is part of the company’s strategy to raise funds for general corporate purposes, including potential further investments in Bitcoin.
GameStop disclosed a significant purchase of 4,710 Bitcoin last month, valued at over $500 million, positioning it among the largest corporate holders of the cryptocurrency. The new convertible note offering is widely interpreted as a move to bolster its Bitcoin treasury, a strategy that has met mixed reactions from the market.
The stock’s recent price action reflects these mixed signals. After falling more than 5% immediately following the earnings release, the announcement of the convertible notes pushed shares down further, confirming resistance near the $30 level.
Technical indicators suggest the stock could test lower support levels around $25 in the near term, especially if Bitcoin prices remain flat or decline. However, a forecasted rise in Bitcoin’s value later this year could provide a bullish catalyst for GameStop’s shares.
Institutional investors have shown some buying interest in 2025 but remain cautious, owning less than 25% of the stock with relatively low volume. Short interest, while reduced from pandemic highs, still weighs on the stock, limiting upside potential without strong positive news.
In summary, GameStop faces a challenging environment as its traditional retail business contracts and the market scrutinizes its pivot toward cryptocurrency investment. The significant share price drop underscores investor skepticism about the sustainability of this strategy amid broader market fluctuations.
The coming quarters will be critical for GameStop to demonstrate whether its Bitcoin investments can offset declines in its core gaming retail operations and restore shareholder confidence.
