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GameStop’s Crypto Pivot Boosts Shares of One-Time Retail Investor Favorite

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GameStop’s decision to invest in bitcoin has sparked renewed interest in the company, leading to an 11.6% surge in its shares to $28.36. The move comes as GameStop’s core brick-and-mortar business faces challenges in attracting customers, but its crypto pivot has brought retail investors back to the stock, once a meme stock favorite.

GameStop’s Bitcoin Investment Strategy

GameStop revealed its new investment strategy on Tuesday, declaring that it would hoard bitcoin as part of its treasury reserve assets. This aligns with the strategy of other companies, such as exchange operator Strategy, which holds a substantial amount of bitcoin. The announcement coincided with increased attention on digital assets, particularly cryptocurrencies, fueled by U.S. President Donald Trump’s focus on the sector.

Despite the positive reaction from retail investors, GameStop’s announcement of a $1.3 billion offering of five-year convertible notes to fund the bitcoin purchase led to a 5.5% drop in its stock during after-hours trading.

Analysts Weigh in on Bitcoin’s Impact

Analysts are skeptical about the long-term impact of the bitcoin investment on GameStop’s share price. Wedbush’s Michael Pachter argued that while the move appeals to retail investors who want GameStop to invest in cryptocurrencies, it is unlikely to drive a substantial increase in the company’s stock value. He pointed out that while companies like Strategy have seen their stock value closely align with their bitcoin holdings, GameStop trades at a higher multiple relative to its cash reserves, which raises questions about the sustainability of this approach.

Despite the volatility of bitcoin, which has seen its price fall from a six-figure high earlier this year, GameStop’s decision to invest in digital assets could lead to increased market fluctuations, according to analysts like Daniela Hathorn from Capital.com.

The Bigger Picture

GameStop’s recent moves, including aggressive cost-cutting measures and store closures, helped the company more than double its net income in the last quarter, although sales dropped by about 30%. These efforts have provided some financial stability for the company, but it remains to be seen whether its pivot to digital currencies will provide sustained growth.

ASML to Halt Reporting of Key Metric, Citing Volatility

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ASML, the world’s leading chip equipment manufacturer, has announced it will stop publishing new order bookings, a key metric closely watched by investors. The company argues that the figure is too inconsistent and causes excessive volatility in its stock price.

Instead, ASML believes its own forecasts—based on discussions with chipmakers about their capacity expansion plans—offer a more reliable indicator of future performance. The company’s circuit-printing machinery plays a critical role in chip manufacturing, but orders can take six to 18 months to fulfill, making quarterly booking figures difficult to interpret.

“The swing factor is significant,” said Chief Financial Officer Roger Dassen, explaining the move.

The decision, announced on Wednesday, came as ASML’s stock jumped 7% following better-than-expected fourth-quarter bookings of €7.1 billion ($7.4 billion), a sharp increase from the €2.6 billion recorded in Q3. The fluctuation was likely driven by timing of orders from TSMC, which recently unveiled a $38 billion capital expenditure plan for 2025.

While analysts acknowledge the downside of losing insight into short-term order trends, they largely understand ASML’s reasoning.

“There is downside for investors, as we lose visibility on average bookings and backlog confidence,” said Sara Russo of Bernstein. However, she agreed that a single quarter’s bookings are not the best measure of long-term business health.

Michael Roeg of Degroof Petercam added that capital expenditure announcements from major clients such as TSMC, Intel, and Samsung already provide sufficient indicators of future demand.

Despite market fluctuations, Dassen emphasized that ASML’s full-year sales and margins remained aligned with its January 2024 forecasts.

“If you put all those quarters together, you see it wasn’t too shabby, was it?” he remarked.