GameStop Explores Crypto Investment, Stock Soars
Introduction:
GameStop (NYSE: GME) shares experienced a surge of 5% in pre-market trading on Friday following reports that the video game retailer is considering investments in cryptocurrencies, including Bitcoin (BTC). However, CNBC emphasized that the company has not made any final decisions and is still investigating the potential.
GameStop's Cryptocurrency Interest:
Over the weekend, GameStop CEO Ryan Cohen posted an image on social media with MicroStrategy (MSTR) CEO Michael Saylor, who has been heavily invested in Bitcoin. This sparked speculation that GameStop may follow a similar path.
Strategy's Bitcoin Success:
MicroStrategy has renamed itself as "the world's first and largest bitcoin treasury company." Its shares have skyrocketed by approximately 370% over the past year, coinciding with Bitcoin's significant rally during the same period.
Market Reaction to Cohen's Post:
Sherwood's Luke Kawa suggests that investors may be anticipating GameStop to emulate MicroStrategy's Bitcoin investment strategy, given the positive market response to Cohen's tweet.
GameStop's Investment Authority:
In December 2023, GameStop's board authorized Cohen to utilize the company's capital for investments. This allows the retailer to act as a holding company, comparable to Daily Journal (DJCO) or Berkshire Hathaway (BRK-B, BRK-A).
Recent Stock Performance:
Despite reaching a high of $64 per share in May 2024, GameStop's stock has declined, losing approximately 15% in the past month. The company's fourth quarter earnings have not yet been released.
Conclusion:
GameStop's potential entry into the cryptocurrency space has generated excitement among investors. However, the retailer has not made any firm commitments and is still evaluating its options. The stock's price may experience further volatility as the situation develops.