GameStop stunned investors Tuesday by announcing plans to add bitcoin to its balance sheet. The video game retailer revealed its board unanimously approved the shift, signalling a dramatic pivot under CEO Ryan Cohen. Shares surged 6% post-announcement, while bitcoin edged up 0.2% to $88,500. The decision follows weeks of speculation after Cohen hinted at crypto ambitions, including a cryptic social media post with MicroStrategy’s Michael Saylor.
The company holds $4.76 billion in cash, fuelling speculation about how aggressively it will buy bitcoin. Analysts call the move a high-stakes gamble to revive the struggling retail giant.
Why GameStop Is Embracing Bitcoin’s Volatility?
GameStop’s decision stems from mounting pressure to innovate. In early February, Strive Asset Management CEO Matt Cole urged Cohen to deploy part of its $5 billion cash reserves into bitcoin. Cole argued the move could position GameStop as the “premier bitcoin treasury company” in gaming. Cohen’s response, a terse “letter received,” hinted at approval.
Additionally, Cohen’s meeting with MicroStrategy’s Saylor, a vocal bitcoin advocate, at Mar-a-Lago fuelled rumours. MicroStrategy’s success in leveraging bitcoin to boost its stock likely inspired GameStop. The retailer aims to replicate this strategy, betting crypto adoption will attract investors and offset declining brick-and-mortar sales.
Following MicroStrategy’s Billion-Dollar Blueprint
GameStop’s strategy mirrors MicroStrategy’s aggressive bitcoin acquisitions. Since 2020, MicroStrategy has amassed over $10 billion in bitcoin, becoming the largest corporate holder. Its stock skyrocketed 400% despite crypto’s volatility. GameStop now eyes a similar path, using bitcoin as a treasury asset to hedge against inflation and diversify holdings.
However, risks loom. Bitcoin’s price swings from $100,000 highs to recent $88,000 lows could destabilise GameStop’s finances. The company admitted in an SEC filing that its untested crypto strategy “may prove unsuccessful.” Yet, with no purchase ceiling set, GameStop appears ready to go all-in.
Investors Cheer Bold Moves Amid Rising Profits
The announcement coincided with strong fourth-quarter results, boosting investor confidence. Net income hit $131.3 million, doubling year-over-year. Cost-cutting measures under Cohen, including layoffs and store closures, contributed to the rebound.
Furthermore, the crypto pivot aligns with Cohen’s vision to transform GameStop into a tech-forward firm. Shareholders welcomed the dual news, sending shares up 5.7% after hours. “This isn’t just about bitcoin; it’s about proving GameStop can adapt,” said Wedbush analyst Michael Pacht A high-risk play in a volatile market.
GameStop’s gamble hinges on bitcoin’s unpredictable trajectory. The cryptocurrency has swung wildly since 2020, impacted by regulatory shifts and macroeconomic trends. For instance, its 18% drop from record highs shows the volatility.
Nonetheless, the company argues holding bitcoin could offer long-term rewards. “Volatility is part of the game,” said CFO Daniel Moore. Stablecoin investments may balance risks, but details remain sparse. Critics warn GameStop’s lack of crypto experience could backfire, especially amid regulatory scrutiny.
The Bigger Trend
GameStop joins Tesla, Square, and MicroStrategy in betting on bitcoin as a reserve asset. Over 50 public firms now hold bitcoin, totalling $20 billion. This trend reflects growing corporate faith in crypto as “digital gold.”
Yet, adoption remains divisive. While proponents tout bitcoin’s scarcity and decentralisation, skeptics cite environmental concerns and regulatory uncertainty. For GameStop, the move is also symbolic of a meme stock embracing another disruptive asset class.
What’s Next for GameStop?
All eyes now watch how quickly GameStop acquires bitcoin. Analysts estimate even a 10% allocation ($476 million) would make it a top corporate holder. Cohen’s team must also navigate crypto’s technical hurdles, including secure storage and accounting practices.
Ultimately, the gamble could redefine GameStop’s identity. Once synonymous with retail decline, it now seeks relevance in the digital economy. Whether bitcoin fuels a comeback or becomes a costly misstep remains to be seen. For now, investors are along for the ride, volatility included.
Written By Fazal Ul Vahab C H
