GameStop stock fell more than 15% on Thursday after Bitcoin Pivot's funding plan raised questions about the timing of its move and strategies to turn the struggling retail business around.
The video game retailer's stock also gave up all profits from a day ago, and was on track for the biggest one-day fall since last June.
The company's announcement that it would buy Bitcoin to hold it as a reserve asset by the Ministry of Finance created a mini-emotion among retailers who sharply track so-called “meme stocks.”
However, GameStop announced this year that it had “closed a considerable number of additional stores,” indicating that retailers have fluttered despite trying to turn it around.
“Investors are not necessarily optimistic about the underlying business,” said Bret Kenwell, US investment analyst at Etoro.
“There's a question mark in the GameStop model. If Bitcoin is a pivot, where does it leave everything else?”
Cryptocurrency prices have also grown by nearly 27% since the November presidential election, so the timing of GameStop's decision to buy Bitcoin is also focused, but the economy is uncertain and it has dropped sharply from record highs.
“Why did (GameStop) wait so long for him to go down this path? Six months ago, nine months ago, it wouldn't have made any more sense,” Kenwell said.
The debt to fund Bitcoin purchases mimics the playbook of strategy, one of Bitcoin's biggest individual holders, widely seen as a Bitcoin proxy.
The overall outlook for Crypto Markets also contributed to the decline as Gamestop's movement “didn't make it a market trust.”
The losses that day caused GameStop shares to fall by more than 23% this year.
