GameStop Explores Cryptocurrency Investments, Driving After-Hours Stock Surge
In a recent move that has sparked market speculation, GameStop (GME) is reportedly exploring investments in cryptocurrencies, including Bitcoin. This news emerged following a CNBC report indicating that the video game retailer is considering such ventures.
While the company has not yet confirmed these plans and is still evaluating its options, the stock experienced a notable surge in after-hours trading on Thursday. GME initially jumped by as much as 20% before retracing some of those gains.
The interest in cryptocurrencies stems from a social media post by GameStop CEO Ryan Cohen over the weekend. Cohen's picture with MicroStrategy CEO Michael Saylor, a prominent Bitcoin advocate, has fueled speculation about GameStop's aspirations in the cryptocurrency realm.
Sherwood's Luke Kawa suggests that investors may be anticipating GameStop to emulate MicroStrategy's Bitcoin acquisition strategy. He notes that the positive market response to Cohen's tweet may indicate traders' hopes for GameStop to utilize its $4.6 billion in cash reserves for Bitcoin investments.
In December 2023, GameStop's board empowered Cohen with the authority to allocate company capital for investments. This move enabled the company to potentially operate like a holding company, similar to Berkshire Hathaway.
Despite the recent surge, GameStop's stock has declined approximately 15% in the past month. The company's fourth-quarter earnings report is yet to be released.