GameStop (GME) stock, once at the center of the meme stock phenomenon, has experienced a significant price increase over the past five years. Despite this impressive growth, the company’s future remains uncertain.
With the video game retailer investing heavily in Bitcoin to offset ongoing financial challenges, many wonder whether GME stock remains overvalued following its BTC acquisition announcement.
GME Stock Price Forecast
Over the last five years, GME stock has surged by more than 1,700%, far outperforming broader market indices. This massive rise has been largely driven by the meme stock frenzy of 2021, where retail investors, particularly on Reddit’s WallStreetBets forum, propelled the price to unprecedented highs.
Despite GameStop’s historical reliance on physical retail sales, the surge in its stock price has raised questions about the sustainability of its valuation.
While GME stock has seen a dramatic increase, GameStop’s core business is under pressure. Sales have dropped significantly, from $8.6 billion in fiscal 2017 to a projected $3.82 billion in fiscal 2025.
Additionally, the company’s net income has also been on a downward trajectory, from $391 million in 2017 to $131.2 million in 2025.
This decline in traditional retail sales has compounded with the global shift toward digital gaming, further straining GameStop’s business model.
GameStop Bitcoin Investment
More so, in an attempt to adapt to the changing market, GameStop has turned to Bitcoin. The company raised $1.75 billion through convertible notes, a form of debt that can later be converted into stock, and invested $500 million of those proceeds into Bitcoin.
This move mirrored the strategy of MicroStrategy (MSTR), a business intelligence firm that has made large Bitcoin investments to diversify its balance sheet.
Notably, GameStop CEO Ryan Cohen has publicly stated that Bitcoin offers a hedge against global currency devaluation and systemic risk. The purchase of 4,710 Bitcoins is a strategic move to protect the company against inflation and economic instability, using cryptocurrency as a store of value.
However, the effectiveness of this strategy is uncertain, as GameStop’s core operations continue to struggle with revenue declines and store closures. The company has shuttered hundreds of physical stores in recent years, including significant closures in North America and Europe.
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GameStop Crypto Strategy
Despite GameStop’s pivot to Bitcoin, analysts have expressed skepticism about the company’s prospects. Wedbush analyst Michael Pachter, who has a “Underperform” rating on GME stock, noted that GameStop’s current valuation is concerning.
While GameStop traded at a multiple of 30 times forward earnings, the company’s future growth prospects are in question due to the long-term shift toward digital gaming.
Moreover, Pachter also highlighted the valuation differences between GameStop and MicroStrategy, pointing out that GameStop trades at roughly 2.4 times its cash value compared to MicroStrategy’s 1.8 times premium to its Bitcoin holdings.
Consequently, this difference suggested that investors may be overvaluing GME stock. Particularly, in light of the company’s uncertain business strategy and reliance on cryptocurrency investments to drive growth.
What’s the Target Price for GME Stock?
According to one analyst, the target price for GME stock in June 2025 is $13.50, suggesting a downside potential of more than 30% from its current price of around $23 per share.
This target price reflected concerns about GameStop’s overvaluation, especially given the company’s ongoing struggles in the gaming retail space.
Furthermore, GME stock price is likely to remain heavily influenced by Bitcoin price movements. If Bitcoin continues to rise, GameStop’s stock could benefit in the short term.
However, if Bitcoin price experiences notable volatility or a decline, GME stock valuation may face considerable pressure, given the company’s heavy reliance on its cryptocurrency investments.
