GameStop Starts Buying Bitcoin as Part of Its Treasury Reserve Strategy
GameStop has announced that it will be investing in Bitcoin as part of its treasury reserve strategy. The announcement comes shortly after the company released its Q4 2024 financial report, which showed a sharp decline in revenue.
Despite its lackluster financial performance, the news of its Bitcoin investment has sent GameStop's stock price up by about 6%. The exposure to the cryptocurrency is expected to help the company's financial performance by 2025.
Is GameStop Following MicroStrategy's Bitcoin Strategy?
GameStop, a popular US electronics and video game retailer, has dabbled in the crypto and Web3 ecosystems several times before. Following the Reddit-fueled stock short squeeze of 2021, the company has shown an interest in new forms of finance, although they have not always been successful.
In this vein, GameStop's recent press release confirmed that the company would begin purchasing Bitcoin as a reserve asset:
"GameStop Corporation today announced that its board of directors has unanimously approved an update to its investment policy to include Bitcoin in its treasury reserve portfolio," the press release reads.
Rumors of GameStop potentially investing in Bitcoin have been circulating since last month. GameStop CEO Ryan Cohen was seen meeting with Michael Saylor, who has turned his company, MicroStrategy, into one of the largest Bitcoin investors.
The crypto community has speculated that Michael Saylor's actions could be a model for GameStop, and now it's a reality.
GameStop's board of directors approved the Bitcoin purchase on the same day the company released its fourth-quarter 2024 financial report. The report showed a significant decline: net revenue was down more than half a billion dollars year-over-year, and sales were down nearly $1.5 billion compared to 2023.
While the company's expenses have decreased and net income has increased somewhat, losses remain a major concern.
A risky but necessary strategy?
GameStop may be taking a risky but necessary gamble with its Bitcoin investment. Despite the worrying revenue situation, the company is not in a full-blown crisis.
GameStop's stock price jumped as much as 6% in after-hours trading immediately after the announcement.
Bitcoin's profit potential
Given Bitcoin's annual growth rate, this investment could be a big win for GameStop. Similar to MicroStrategy, a controlled exposure to Bitcoin could help the company boost revenue during a bull market for cryptocurrencies, giving the retailer an opportunity to increase its stock value while maintaining its core business.