GameStop Explores Cryptocurrency Investments, Leading to Premarket Surge
GameStop (GME) experienced a 6% premarket rise on Friday after CNBC reported the video game retailer's interest in investing in cryptocurrencies, including Bitcoin (BTC-USD).
CEO's Post Sparks Speculation
On Sunday, GameStop CEO Ryan Cohen's social media post with MicroStrategy (MSTR) CEO Michael Saylor sparked speculation about the company's interest in cryptocurrency. Saylor's company has significantly invested in Bitcoin, holding over 447,000 tokens.
Market Response and Potential Bitcoin Buying Model
GameStop's stock surge following Cohen's post suggests investors anticipate the company adopting MicroStrategy's Bitcoin buying model. The market's positive reaction highlights the potential for GameStop to use its significant cash reserves to invest in cryptocurrencies.
Board Authority and Investment Strategy
GameStop's board approved Cohen's authority to use the company's capital for investments in December 2023. This enables the video game retailer to function like a holding company, using its cash reserves to make strategic investments.
Recent Performance and Outlook
Despite a peak at $64 per share in May 2024, GameStop's stock has since declined and is currently trading 15% lower than a month ago. The company is yet to release its fourth-quarter earnings report.