Exploring Crypto Investments
GameStop, the well-known video game retailer turned meme stock, is reportedly considering investing in Bitcoin and other cryptocurrencies, according to sources familiar with the matter. The company is exploring alternative asset classes, with a specific focus on cryptocurrency, three sources revealed. Following the news, GameStop’s shares surged by as much as 20% in extended trading.
However, the company has not made a final decision and could ultimately choose not to proceed with the investment. One source noted that GameStop is still evaluating whether such a move aligns with its overall business strategy. Last weekend, CEO Ryan Cohen fueled speculation by sharing a photo on social media platform X featuring Michael Saylor, co-founder and chairman of MicroStrategy, a company known for its substantial Bitcoin holdings. Despite the photo, two sources confirmed that Saylor is not currently involved in GameStop’s internal discussions regarding crypto investments.
GameStop’s Past Crypto Ventures and Business Challenges
This is not GameStop’s first foray into the cryptocurrency space. In 2022, the retailer introduced crypto wallets designed to help users manage their digital assets, including non-fungible tokens (NFTs). However, the service was discontinued in 2023 due to what the company cited as “regulatory uncertainty.”
GameStop has been undergoing significant transformation since Ryan Cohen, co-founder of Chewy, became a key figure in the company’s leadership. After purchasing shares in 2020, he joined the board in 2021, raising hopes that his e-commerce expertise could help modernize the struggling retailer. Despite efforts to adapt, the company continues to face challenges as gaming industry trends shift towards digital downloads and online services.
Under Cohen’s leadership, GameStop has prioritized cost-cutting measures and operational efficiency rather than aggressive growth. As of November 2, the company had built a cash reserve of $4.6 billion, which it has been using for strategic investments, according to a December securities filing.
A Potential Shift Towards Bitcoin Holdings
If GameStop proceeds with adding Bitcoin to its balance sheet, it would follow the path of MicroStrategy, which has amassed billions of dollars in Bitcoin investments over the years. The strategy has transformed MicroStrategy from a software company into a significant holder of Bitcoin, leading to substantial yet volatile stock performance.
In December 2023, GameStop’s board approved a new investment policy, granting Cohen and select independent board members the authority to oversee the company’s securities investments. Any investments must adhere to the policy’s guidelines or receive unanimous approval from the committee or a majority vote from the full board.
While GameStop continues to evaluate the feasibility of cryptocurrency investments, its potential entry into the space signals an ongoing effort to explore innovative financial strategies amid a rapidly evolving market landscape.
