GameStop Explores Cryptocurrency Investment, Driving Stock Surge
GameStop (GME) experienced a significant after-hours surge of approximately 10% on Thursday following a report by CNBC. The report suggests that the video game retailer is exploring the possibility of investing in cryptocurrencies, including Bitcoin (BTC).
CNBC emphasized that GameStop may not finalize these investments and is still evaluating its options. The stock initially surged by 20% after hours but later retracted some of those gains.
Speculation about GameStop's interest in cryptocurrency was fueled by a weekend social media post by CEO Ryan Cohen. Cohen posted a photo with Michael Saylor, the CEO of Strategy, formerly known as MicroStrategy. Strategy has invested heavily in Bitcoin, currently holding over 447,000 coins.
In February 2023, Strategy declared itself "the world's first and largest bitcoin treasury company." The company's stock has surged by 370% over the past year as Bitcoin has rallied by nearly 100%.
Luke Kawa of Sherwood noted that the rise in GameStop's shares following Cohen's tweet may indicate that investors are betting on GameStop adopting a similar Bitcoin investment strategy to Strategy. Kawa stated, "The warm market response to Cohen's tweet suggests that traders are hoping that Cohen uses some of GameStop's $4.6 billion in cash and cash-like securities to take a page from Saylor's playbook."
In December 2023, GameStop's board authorized Cohen to utilize the company's capital for investments. This move enables the video game retailer to utilize its cash reserves like a holding company, similar to Daily Journal (DJCO) or Berkshire Hathaway (BRK-B, BRK-A).
Despite a resurgence in meme stock trading in May 2024, GameStop's shares have declined by 15% over the past month. The company has yet to release its fourth-quarter financial results.