While GameStop celebrates a surprising net income increase of 108% in Q4 2024, the gaming retailer finds itself steering through choppy waters as it contends with plummeting sales and an aggressive store closure strategy.
Despite posting an impressive $131.3 million in quarterly profits, the company’s revenue tells a grimmer tale, with net sales dropping a staggering 28% compared to the same period last year.
Behind the profit facade lies the uncomfortable truth: GameStop is bleeding revenue at an alarming rate.
The gaming retailer, once the darling of Reddit’s investment community, closed 590 U.S. stores in 2024 and has signaled plans to shutter a “significant number” more in 2025. It’s like watching a chess player sacrifice pawns to protect the king—except in this case, the pawns are brick-and-mortar locations that have fallen victim to the unstoppable digital revolution.
GameStop’s recent pivot to Bitcoin has raised eyebrows across Wall Street. The company’s board approved an updated investment policy allowing it to use its substantial adjusted EBITDA of $96.5 million in Q4 2024, up from $88.0 million in the same period last year, to purchase Bitcoin as a treasury reserve asset.
To double down on this crypto bet, GameStop announced a private offering of $1.3 billion in Convertible Senior Notes—zero-interest IOUs that mature in 2030—with proceeds earmarked partly for Bitcoin acquisitions.
The market initially cheered this crypto gambit, sending shares up 8% in after-hours trading. But the honeymoon proved short-lived as reality set in: GameStop was fundamentally borrowing money to gamble on a notoriously volatile asset while simultaneously slashing its retail footprint.
The company boasts strong cash reserves of $4.775 billion in cash, cash equivalents, and marketable securities, giving it flexibility to attempt this strategic pivot despite ongoing revenue challenges.
GameStop’s struggles mirror broader retail industry woes, with over 7,325 store closures across America in 2024—the highest since the pandemic’s peak. Analysts predict the carnage will intensify, with potentially 15,000 stores shuttering in 2025.
Some industry observers suggest GameStop’s Bitcoin strategy represents a tentative step toward embracing DeFi opportunities that could potentially create new revenue streams beyond traditional retail and banking models.
For a company that specifically cited digital gaming as an existential threat in SEC filings, GameStop’s Bitcoin strategy represents either a bold reimagining of its business model or a desperate Hail Mary pass.
Either way, investors are clearly skeptical about whether this crypto pivot can truly transform the company’s fortunes.
