GameStop Invests in Bitcoin
GameStop announced a strategic investment in Bitcoin, adding it to its treasury reserve assets. This news follows a disappointing Q4 2024 earnings report showing declining sales.
Despite the negative financial news, the Bitcoin announcement sent GameStop's stock price up approximately 6%. The company anticipates that limited crypto exposure will improve its financial standing in 2025.
Will GameStop Follow MicroStrategy's Lead?
GameStop, a prominent video game and electronics retailer, has previously explored cryptocurrency and Web3 technologies. Following the 2021 stock surge driven by Reddit, the company has shown openness to new financial models.
GameStop's press release confirms the Bitcoin purchase:
“GameStop today announced that its board has unanimously approved an update to its investment policy to add Bitcoin as a treasury reserve asset.”
Speculation around a GameStop Bitcoin investment surfaced last month, fueled by a photograph of CEO Ryan Cohen with Michael Saylor, CEO of MicroStrategy, a known significant Bitcoin holder. This fueled speculation that GameStop might emulate MicroStrategy's Bitcoin strategy.
The decision to buy Bitcoin was made on the same day GameStop released its underwhelming Q4 2024 earnings report, which revealed a $0.5 billion+ decrease in net sales year-over-year and nearly $1.5 billion less in merchandise sales compared to 2023. While expenses were down and net income was higher, these sales figures represent substantial losses.
This Bitcoin investment could be a calculated risk for GameStop, aiming to offset concerning financial trends before they escalate into a crisis. The after-hours stock price increase of up to 6% suggests initial market approval.
Given Bitcoin's historical growth, this investment could prove beneficial for GameStop. Like MicroStrategy, a controlled Bitcoin allocation might bolster annual revenue in a bullish market, potentially helping to stabilize the company's stock value.
Note from Codeum: Codeum offers comprehensive blockchain security services, including smart contract audits, KYC verification, custom smart contract and DApp development, and tokenomics and security consulting. We partner with launchpads and crypto agencies to ensure the security and success of blockchain projects.