New BTC strategy faces first test

GameStop stock price will be in the spotlight this week as the company publishes its first earnings since it started buying Bitcoin.

GameStop stock ended the week at $29.58, down 16% from its highest point this year. Its market capitalization is over $13 billion. 

Wall Street analysts expect the company’s core business results to show sustained weakness as more customers pivot towards online games. Data compiled by Yahoo Finance show that revenue will be $754 million, down by 14.47% from the same period last year. 

Analysts also expect its guidance for the second quarter to be $748 million, down 6.28% year over year. The estimate for its annual revenue is $3.56 billion and $3.13 billion next year. 

These numbers will represent a continuation of what has been happening. GameStop’s annual revenue moved from $6 billion in 2022 to $5.27 billion in 2023 and $3.8 billion last year.

Analysts expect that GameStop’s core business may face extinction as the video game industry changes. This explains why the company decided to emulate Strategy, a company whose valuation has jumped to over $100 billion because of its Bitcoin (BTC) holdings. 

GameStop has become one of the biggest Bitcoin holders. It holds 4,710 coins valued at over $497 million, and the management hopes to continue purchasing.

GameStop has room to boost its Bitcoin holdings because of its strong balance sheet. It ended the last quarter with over $4.7 billion in cash, short-term investments, and no debt. Its equity valuation of over $13 billion also gives itthe flexibility to sell shares to fund these purchases. 

The company’s Bitcoin holdings to market cap are 3.76% (in contrast, Michael Saylor’s Strategy is 58%). 

GME stock price analysis

The daily chart shows that the GME share price has retreated since it started implementing its Bitcoin strategy. 

It moved from $35 in May to $29.58. This price is inside the ascending channel connecting the highest and lowest swings since May last year. 

The stock remains above the 50-day and 100-day moving averages, a bullish thing. 

GME stock’s outlook is neutral ahead of its first quarter fiscal 2025 results, set to be released after the market closes on Tuesday, June 10.

The key levels to watch will be the psychological point at $20 and the resistance point at $35.78.