GuShiio.com Bitcoin may provide GameStop with a new growth path.
Original author: BitpushNews Mary Liu
On the afternoon of February 13, New York time, game retailer GameStop’s share price rose sharply in after-hours trading due to news that it might invest in Bitcoin and other cryptocurrencies.
According to CNBC, citing sources, GameStop is considering investing in cryptocurrencies such as Bitcoin. After the news broke, its share price soared 20% in after-hours trading before falling back to around $26.34.
GameStop has been known as an “Internet celebrity” in recent years. In 2021, driven by Keith “Roaring Kitty” Gill, its share price soared and then entered a downward period. In 2024, Gill’s multiple appearances once again helped GameStop’s share price rebound. However, despite sharp stock price fluctuations, GameStop’s actual business performance is not optimistic.
Poor performance, GameStop faces transformation pressure
GameStop, as a game and collectibles retailer mainly based on physical stores, has struggled in recent years amid the wave of overall industry transformation to digital.
Wall Street has attracted less attention to GameStop. Wedbush analyst Michael Pachter reiterated his “underperformance” rating on GameStop in a recent report and set its price target at $10, which means that after deducting cash, the company’s actual value is almost zero.
“The company plans to return to growth, but faces insurmountable obstacles,” Pachter pointed out. GameStop’s core business-physical game sales-is being hit by digital downloads and cloud games, causing revenue and profits to continue to decline. Although the company has achieved short-term profits by cutting costs and optimizing operations, its long-term growth prospects remain bleak.
Is Bitcoin investment a hope for a comeback?
GameStop’s exploration of encryption began in 2022, when the company launched a crypto wallet that allows users to manage cryptocurrencies and NFTs. It also works with industry partners such as game network Immutable to plan to support the trading of in-game assets, avatars and other digital collectibles.
However, due to “regulatory uncertainty”, the company closed the NFT market in early 2024. Despite this, GameStop has not completely abandoned its interest in the crypto space.
The news of investing in Bitcoin came after US President Trump took office. Trump’s campaign pledge to support the cryptocurrency industry may be one reason GameStop is rethinking investment in the crypto space.
It is worth noting that GameStop CEO Ryan Cohen took a photo with MicroStrategy co-founder and executive chairman Michael Saylor last week, further triggering market speculation.
MicroStrategy is the world’s largest holder of corporate bitcoin, with its bitcoin reserves worth more than $46 billion. Since it began hoarding bitcoin in 2020, MicroStrategy has made generous returns and inspired more and more companies to add bitcoin to their balance sheets.
Sherwood analyst Luke Kawa pointed out that GameStop’s share price rose after Ryan Cohen’s tweet, and investors may be betting that GameStop will follow Strategy’s Bitcoin buying model.
Analysts said: “The enthusiastic market response to Cohen’s tweet suggests traders want Cohen to use GameStop’s $4.6 billion in cash and cash-like securities to follow Michael Saylor’s lead. (There is only one rule in that strategy: Buy Bitcoin.)
Whether GameStop will officially enter the cryptocurrency field has not yet been officially confirmed, but this news has undoubtedly added new imagination to the market.
With $4.6 billion in cash reserves, how did Ryan Cohen lead GameStop out?
Ryan Cohen, co-founder of e-commerce company Chewy, purchased GameStop shares in 2020 and joined the board of directors in 2021. Under his leadership, GameStop began focusing on cutting costs and streamlining operations to ensure the profitability of the business, although its growth remained sluggish. As of November 2, 2023, GameStop has accumulated $4.6 billion in cash reserves and has been using these funds to invest.
In December 2023, GameStop’s board of directors approved a new “investment policy” that allows Cohen, two independent board members and other necessary personnel to manage the company’s securities portfolio. These investments must comply with policy guidelines or be approved by a unanimous vote of the committee or a majority vote of the board.
Although the company is currently facing the dual pressure of declining performance and industry transformation, Bitcoin, as an emerging asset with high volatility and high return, may provide GameStop with a new growth path. Whether GameStop can rely on holding coins to make a beautiful comeback is still full of uncertainty.
