GameStop Looks Broken: Here's Why GME Could Crash in 2026

GameStop’s (NYSE: GME) fiscal Q3 earnings performance was better than expected, but this stock is still not a good one to hold, buy, or trade. That’s because the core retail business continues to flounder, the strengths are driven by a cash balance tied to aggressive dilution, and the Bitcoin (BTC) strategy is highly questionable. While the company has been able to convert some of its cash into BTC, the reasons for its holding BTC are ephemeral. The critical takeaway is that other BTC-focused stocks are in even worse condition (in terms of shareholder value) than GameStop, increasing the odds that GME’s stock is on track for a massive decline. 

Strategy (NASDAQ: MSTR) is a prime example of why BTC repository stocks are a potential waste of time. The company persistently dilutes its stock to fund BTC purchases, eroding shareholder value and increasing Bitcoin exposure risk. In Q4 2025, the price of BTC pulled back sharply from its highs, is trading well below GameStop’s entry point, and has an outsized impact on Strategy’s share price, pointing to similar weakness in GME. Down more than 50% from its high, MSTR stock is setting up for another downleg that could take it below the $150 mark and potentially to levels not seen in several years. 

GameStop’s Core Business Flailed for Another Quarter in Q3

GameStop’s core business continues to struggle, affecting its Q3 results. The company’s $821 million in net revenue is down 4.5% year-over-year (YOY), driven by a 12% decline in hardware and a 27% decline in software sales. These segments accounted for more than 70% of the business and are offset by strength in the Collectibles segment. Collectibles increased by 27% YOY, aided by its intensified focus on trading cards and “geek” culture. The bad news is that, while up, collectible sales are still below their peak and may never eclipse prior strength.

Margin news is good. The company has reduced its footprint and operating costs, leveraged higher-margin collectible sales, and produced an operating profit. However, the bulk of profits is tied to the company’s cash balance, which is at risk due to its BTC strategy and its need to generate growth. GameStop investors have waited for years to hear something about a growth plan that makes sense, and there is still no word on that. 

GameStop Has No Market Support That Counts 

GameStop’s price is unlikely to move higher because it has little market support and few reasons for investors to buy it.

Only two analysts now cover the stock, and MarketBeat’s consensus sits at Reduce, projecting a 40% downside. Institutions, which own about 30% of the shares, moved from net buying to net selling in Q4. Their selling, along with elevated short interest, creates significant resistance against any retail-driven momentum.

While short interest has declined over the preceding two months, it remains elevated, was above 15% in late November, and is likely to increase following the Q3 release.

For those hoping for another meme-quality short squeeze, be warned: this market is played; the retail dollars that drove the meme rallies in 2021 and 2024 are unlikely to be repeated.

GameStop Price Action Deteriorates: Lower Lows Are Indicated

GameStop’s price action retreated by 5% following the Q3 release and is at risk of a more profound decline. The move puts the market below its cluster of moving averages, signaling broad-based bearishness that may carry over into the open session. The critical support target is located near the bottom of the 18-month trading range, at approximately $20, and may be tested or broken before the end of the year. 

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "GameStop Looks Broken: Here’s Why GME Could Crash in 2026" first appeared on MarketBeat.