GameStop share valuation is still just relying on 'greater fools' theory, says Wedbush
GameStop 's share valuation is dependent on speculation in overvalued assets because the company's turnaround strategy for its underlying video game business remains murky, according to Wedbush analyst Michael Pachter. "Despite a complete lack of a clear strategy, GameStop has consistently capitalized on the existence of 'greater fools' willing to pay more than twice its asset value for its shares — and so far, they've been correct," Pachter said in a note out Wednesday to clients. The brick-and-mortar retailer reported a decline in first-quarter revenue on Tuesday as demand for online gaming rose. GameStop recently bought 4,710 bitcoins , worth more than half a billion dollars, as the firm began a crypto purchasing plan similar to one made famous by MicroStrategy . GME YTD mountain GameStop shares in 2025. However, the Wedbush analyst believes the bitcoin buying strategy makes little sense from a fundamental business standpoint. "It is difficult to understand why any investor would be willing to pay more than 2x cash value for the possibility of GameStop converting more of its cash into Bitcoin, especially since these investors could invest in Bitcoin or a Bitcoin ETF themselves," Pachter said. "The company already trades at 2.4x cash, making it unlikely that converting more cash to crypto will drive an even greater premium." Gamestop CEO Ryan Cohen recently said GameStop's decision to buy bitcoin is driven by macroeconomic concerns, saying the digital coin, with its fixed supply and decentralized nature, could serve as protection against risks. The analyst reiterated Wedbush's underperform rating on GameStop and a 12-month price target of $13.50, or 55% below Tuesday's close at $30.15. Pachter said his target comprises about $12.50 a share in cash and a going-concern value of $1 a share. "GME shares trade at a level that overlooks the many challenges ahead," he said.
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