GameStop Explores Cryptocurrency Investments
GameStop (GME) saw a significant pre-market rise of approximately 6% on Friday following reports by CNBC that the video game retailer is considering investing in cryptocurrencies including Bitcoin (BTC-USD). CNBC emphasized that the company's investment plans are still in the exploratory phase and may not materialize.
Speculation about GameStop's interest in cryptocurrency arose after a weekend social media post by CEO Ryan Cohen, who shared a photo with Michael Saylor, CEO of MicroStrategy (MSTR). Saylor has been widely recognized for his company's acquisition of over 447,000 Bitcoin tokens.
The announcement of MicroStrategy's renaming to "the world's first and largest bitcoin treasury company" sparked a 370% increase in the company's shares over the past year, coinciding with a surge of nearly 100% in the cryptocurrency's value.
Analysts suggest that investors may be anticipating that GameStop will follow MicroStrategy's Bitcoin investment model, especially given Cohen's previous post. Sherwood's Luke Kawa noted that GameStop's large cash and cash-equivalent holdings of $4.6 billion could potentially be used for Bitcoin purchases.
In December 2023, GameStop's board authorized Cohen to invest the company's capital, enabling operations similar to holding companies such as Daily Journal (DJCO) and Berkshire Hathaway (BRK-B, BRK-A).
GameStop's share price has declined by approximately 15% in the past month, following a peak of $64 per share in May 2024. The company is yet to release its fourth-quarter earnings report.