GameStop (GME) shares tumbled over 8% in after-hours trading on Wednesday, following the announcement that the company intends to raise a staggering $1.3 billion to invest in Bitcoin (BTC-USD). The funding will be sought through the issuance of convertible senior notes, a move that has raised eyebrows across the financial world.

This development comes just a day after GameStop’s stock soared nearly 12% when the company disclosed that its board had unanimously approved a significant shift in its investment policy to include Bitcoin as a key treasury reserve asset. Speculation about GameStop’s entry into cryptocurrency had been ignited recently, particularly after CEO Ryan Cohen's social media post on February 8, which featured a picture with MicroStrategy CEO Michael Saylor—a vocal proponent of Bitcoin who leads a company boasting over 447,000 Bitcoin tokens.

Saylor’s strategy has yielded impressive results for MicroStrategy, with its stock appreciating over 84% in the last year, fueled by a rally in Bitcoin prices. However, analysts on Wall Street remain skeptical about whether a similar strategy will benefit GameStop. "The company's strategy has seen multiple pivots over the last three years. Now they aim to emulate MicroStrategy by investing in cryptocurrency," said Wedbush analyst Michael Pachter in an interview with Yahoo Finance. He expressed concerns, stating, “MicroStrategy values its shares at about twice the value of their Bitcoin holdings. Should GameStop adopt this model, with their $4.6 billion cash reserves, their stock could potentially plunge if it mirrors MicroStrategy’s approach."

Compounding concerns, GameStop released its fourth-quarter earnings report, revealing a disappointing $1.28 billion in net sales—down 28% from the same quarter last year. The company also disclosed an adjusted EBITDA of $36.1 million for the full year, a significant decline from $64.7 million the previous year.

The road ahead for GameStop remains uncertain as it ventures into the volatile cryptocurrency market—will they succeed in turning their fortunes around, or is this just another misguided leap into unfamiliar territory? As investors and market analysts are closely watching, it’s a critical time for GameStop’s leadership to justify this dramatic pivot.

Stay tuned for more updates as this compelling saga continues to unfold!