GameStop (GME) was at the center of the meme stock mania that gripped Wall Street four years ago. Today, GME stock trades near $23 per share, valuing the company at a market cap of $9.9 billion. Over the last five years, GameStop stock has surged by over 1,700%, outperforming broader market returns by a wide margin.
However, in a note to investors, Wedbush stated that GameStop is trading on the “greater fools” theory, saying that “it is difficult to understand” why anyone would buy shares now. This theory states that an investor buys an overvalued asset with the intent of then selling it for a higher price to a “greater fool.” Or, in other words, “there is always a greater fool willing to pay more.”
Is GME Stock a Good Buy?
The video game retailer has seen its sales drop from $8.6 billion in fiscal 2017 (ended in January) to $3.82 billion in fiscal 2025. In this period, its net income has declined from $391 million to $131.2 million.
In recent years, GameStop has focused on cost optimization. For instance, it exited operations in three European countries in fiscal 2023 and recently announced plans to exit from Canada and France. In fiscal 2024, it shut down 590 stores in the U.S. and is expected to close a “significant number” of stores this year too.
A focus on profitability is likely to expand its bottom line in the future. According to analysts’ estimates, GameStop is forecast to increase adjusted earnings per share from $0.33 in fiscal 2025 to $0.73 in fiscal 2026.
Priced at 30 times forward earnings, GME stock is not too expensive, given its growth estimates. However, the company continues to grapple with the global shift toward digital gaming, which is expected to impact its top-line growth negatively.
Is GameStop a Bitcoin Company?
GameStop stock fell more than 22% in a single trading session last week after the video game retailer announced plans to raise $1.75 billion through convertible notes, likely to fund additional Bitcoin (BTCUSD) purchases as the company follows MicroStrategy’s (MSTR) playbook.
The struggling brick-and-mortar retailer has pivoted to a Bitcoin treasury strategy similar to MicroStrategy’s successful model. In May, GameStop purchased 4,710 Bitcoin worth approximately $500 million using proceeds from a convertible note offering.
GameStop CEO Ryan Cohen attributed the Bitcoin strategy to macroeconomic concerns, stating at a Las Vegas Bitcoin conference that the cryptocurrency could serve as “a hedge against global currency devaluation and systemic risk.” The company’s convertible notes mature in June 2032 with an initial conversion price of $28.91 per share, requiring a 25% increase in the stock price to make them worthwhile.
Despite the Bitcoin bet, GameStop’s core business remains challenged. First-quarter fiscal 2025 results showed nearly $45 million in net income, an improvement from last year’s $32 million loss. However, revenue declined 17% as the gaming market continued to shift toward digital downloads.
Analysts remain skeptical about the effectiveness of the strategy. Wedbush analyst Michael Pachter issued an “Underperform” rating, noting GameStop trades at roughly 2.4 times its cash value compared to MicroStrategy’s 1.8 times premium to its Bitcoin holdings.
While MSTR stock has surged around 3,000% since adopting its Bitcoin strategy in 2020, GameStop’s success remains uncertain given its lack of a sustainable long-term business strategy beyond cryptocurrency investments.
What Is the Target Price for GME Stock?
A single analyst who tracks GME stock has a “Strong Sell” recommendation. The target price for GameStop stock in June 2025 is $13.50, indicating a downside potential of over 30% from current levels.
GameStop stock is likely to be tied to BTC prices going forward. But it would make sense to place your bet directly on the digital asset and gain exposure to the world’s largest cryptocurrency rather than buying GME shares.
