GME stock surged at the open Wednesday, then quickly retreated after video game retailer GameStop announced its first bitcoin purchase.
GameStop on Wednesday revealed that it purchased 4,710 bitcoin. The company did not list a total acquisition price or a price per coin.
Bitcoin traded between roughly $108,300 and $110,700 on Tuesday. Based on the approximate midpoint of $109,500, GameStop spent over $515.7 million on the bitcoin purchases.
The bitcoin buys are part of a larger company strategy to invest in cryptocurrencies. GameStop in late March raised $1.3 billion in an offering of convertible notes to help fund bitcoin purchases. That move followed a board motion to update the company investment policy to add bitcoin as a reserve asset.
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But is GME becoming a viable growth stock? The answer is not yet.
GameStop for its Q4 report on March 25 reported earnings of 30 cents per share adjusted, to beat FactSet expectations for 8 cents. Revenue fell 28% to $1.28 billion, missing views for $1.48 billion.
Hardware and accessory sales, which include new and pre-owned gaming consoles and bundles, made up 56.6% of revenue for the quarter. Software, which includes new and pre-owned gaming software, made up 22.3% of revenue. Collectibles accounted for 21.1% of sales for the quarter.
Cash, cash equivalents and marketable securities stood at $4.775 billion at the end of the quarter vs. $922 million a year earlier. GameStop also completed the divestiture of its Italy operations and wound-down store operations in Germany.
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GameStop has now reported solid earnings gains in five of the past six quarters. For the company's upcoming Q1 results, FactSet expects GameStop to report earnings of 8 cents per share adjusted, compared to a loss of 12 cents last year.
On the revenue line, however, analysts forecast about a 15% drop, to $750 million. GameStop revenue has not increased since the quarter ended July 2023.
Meanwhile, cash and cash equivalents are expected to balloon in the coming quarter to $5.95 billion. Forecasts for GameStop's cash flow from financing is $1.3 billion, the amount of the debt offering, compared to outflows of $3 million last year.
Analysts expect GameStop to report an outflow of $102 million from operations, compared to an outflow of $110 million last year. GameStop reported cash flows from operations of $162 million for Q4, which is seasonally the company's strongest quarter.
GME Stock
GameStop stock jumped 7% at the open Wednesday, before reversing to a 10.9% decline. Shares advanced 6% on Tuesday.
GME stock is trading above a buy zone for a double-bottom base. Shares broke out above the 29.80 buy point on May 23, MarketSurge charts show.
GameStop is up now down less than 1% in 2025.
GME stock's 21-day average true range is 4.4%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
