GameStop, the iconic video game retailer that captured the attention of investors during the meme stock frenzy, is now considering a bold move into the world of cryptocurrency. Sources familiar with the matter revealed that GameStop is exploring potential investments in bitcoin and other digital assets as part of its strategy to diversify into alternative asset classes.
The news of GameStop’s potential foray into cryptocurrencies sent its stock price soaring by as much as 20% in after-hours trading, reflecting the market’s excitement and anticipation surrounding this development. While the retailer has not made any final decisions yet, its willingness to explore this new investment avenue underscores its commitment to exploring innovative opportunities in a rapidly evolving financial landscape.
The idea of GameStop diving into the crypto space gained momentum following a recent social media post by CEO Ryan Cohen, who shared a photo with Michael Saylor, the co-founder and chairman of MicroStrategy, a prominent corporate holder of bitcoin. Despite the buzz generated by this encounter, sources clarified that Saylor is currently not directly involved in GameStop’s discussions regarding potential cryptocurrency investments.
This potential move by GameStop comes on the heels of its previous foray into the world of digital assets. In 2022, the company launched crypto wallets that allowed users to manage their cryptocurrencies and nonfungible tokens (NFTs). However, GameStop discontinued this service in 2023, citing regulatory uncertainties that clouded the viability of the venture.
Ryan Cohen, known for his role as a co-founder of Chewy, a successful online pet retailer, made significant investments in GameStop in 2020 and subsequently joined its board in 2021. His appointment was seen as a pivotal moment for GameStop as it navigated its transformation from a traditional brick-and-mortar retailer to a player in the digital economy. However, despite Cohen’s efforts to streamline operations and cut costs, GameStop continues to face challenges in adapting to the evolving preferences of gamers.
One of the key milestones in GameStop’s journey towards potential cryptocurrency investments was the approval of a new “investment policy” by its board in December 2023. This policy empowers Cohen, along with two independent board members and other designated staff, to oversee the management of GameStop’s portfolio of securities investments, subject to specific guidelines and approval processes.
Should GameStop decide to add bitcoin to its balance sheet, it would be following the trailblazing path of MicroStrategy, a company that significantly bolstered its financial position by acquiring substantial holdings of the digital currency. MicroStrategy’s strategic pivot towards bitcoin investments proved to be a transformative move, reshaping the company’s profile from a software stock to a bitcoin-centric entity and driving significant stock price appreciation.
As GameStop continues to explore potential investments in cryptocurrencies, the market eagerly awaits further developments and strategic decisions that could redefine the company’s trajectory in the digital age. With a cash reserve of $4.6 billion as of November 2022, GameStop is well-positioned to embark on new ventures and seize opportunities that align with its vision for sustained growth and profitability in an ever-changing market landscape.
