GameStop Plunges 22%—Is This the End of the Meme Stock Era?

Another brutal selloff hits GameStop—down 22% in a single session. Retail traders’ favorite toy stumbles as the market shrugs off meme-stock mania.

Once the poster child of the Reddit-fueled trading frenzy, GameStop now faces a harsh reality check. The ‘hold the line’ crowd watches helplessly as gravity reasserts itself.

Wall Street’s old guard smirks—turns out fundamentals still matter after all. Short squeezes and viral hype can’t defy math forever.

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The selloff came just hours before GameStop priced an upsized $2.25 billion offering of convertible notes due 2032. The company expects to raise approximately $2.23 billion in net proceeds, or up to $2.68 billion if the full overallotment option is exercised. GameStop said the funds will go toward general corporate purposes, including further Bitcoin purchases and potential acquisitions.

And that’s where concerns deepen. GameStop appears to be moving further away from its core retail business and deeper into crypto speculation. It recently disclosed the purchase of 4,710 Bitcoins, now worth over $500 million. But rather than spark investor excitement, the news seems to have intensified anxiety.

Why Investors Are Fleeing

At the heart of the selloff is dilution risk. The convertible notes are debt instruments that can be converted into equity. If exercised, they could significantly increase the share count, eroding earnings per share and existing shareholder value.

The offering also followed weaker-than-expected Q1 2025 results. Revenue came in at $732.4 million, missing Wall Street’s forecast of $754.2 million. While EPS of $0.09 beat the expected $0.04, it wasn’t enough to offset the broader concerns surrounding GameStop’s strategy.

For now, weak results, risky crypto moves, and dilution fears are driving investors away. Without a clear growth plan, GameStop may find it hard to win back market trust.

 Is GME Stock a Buy, Sell, or Hold?

GameStop’s fundamentals and unpredictable trading patterns have led many Wall Street analysts to take a step back from covering the stock. One of the few analysts still covering this stock is Michael Pachter of Wedbush, who continues to maintain a Sell rating. According to him, he sees more than 54% downside for GameStop based on his price target of $13.5 per share.