GameStop (GME) stock jumped more than 6% in after-hours trading on Tuesday following the company’s announcement that it plans to invest in Bitcoin (BTC-USD). The decision, approved unanimously by its board, marks a strategic shift as the video game retailer adds Bitcoin to its treasury reserves.
The company confirmed the move in a press release, stating, “GameStop’s board has unanimously approved an update to its investment policy to add Bitcoin as a treasury reserve asset.” This marks a significant pivot for the former brick-and-mortar video game retailer, which has been exploring alternative investments amid changing market dynamics.
GameStop’s Crypto Strategy Gains Traction
The announcement comes about a month after CNBC reported that GameStop was considering cryptocurrency investments. Speculation intensified on February 8 when CEO Ryan Cohen posted a picture on X (formerly Twitter) with MicroStrategy (MSTR) CEO Michael Saylor, a well-known Bitcoin advocate. MicroStrategy holds over 447,000 Bitcoin tokens, according to a February filing, and has seen its stock surge more than 84% in the past year alongside Bitcoin’s price appreciation.
GameStop’s move into cryptocurrency mirrors MicroStrategy’s strategy, which has yielded strong gains for Saylor’s company. However, financial analysts remain cautious about whether the investment will drive GameStop’s stock higher in the long term.
Analysts Weigh in on GameStop’s Bitcoin Play
Michael Pachter, an analyst at Wedbush Securities, remains skeptical about GameStop’s ability to replicate MicroStrategy’s success. Speaking to Yahoo Finance, Pachter said, “The company’s strategy has shifted about six times in three years. Now they plan to buy cryptocurrency and be like MicroStrategy.”
He further explained the potential downside, stating, “MicroStrategy trades at about two times their Bitcoin holdings. If GameStop were to invest its $4.6 billion cash reserves entirely into Bitcoin and achieve a similar valuation multiple, the stock could actually drop by five dollars.”
GameStop’s Financial Performance Raises Questions
Alongside its Bitcoin announcement, GameStop released its fourth-quarter earnings results. The company reported net sales of $1.28 billion for the quarter, a steep 28% decline compared to the previous year. Adjusted EBITDA for the full year also dropped, falling to $36.1 million from $64.7 million in the prior period.
Despite the earnings downturn, investor enthusiasm over GameStop’s Bitcoin move temporarily overshadowed financial concerns, pushing the stock up 8.27% to $27.50 in after-hours trading.
Will Bitcoin Investment Revive GameStop?
GameStop’s adoption of Bitcoin as a treasury reserve asset signals a new era for the company, but whether it can successfully leverage cryptocurrency to drive growth remains uncertain. While Bitcoin has proven to be a lucrative asset for companies like MicroStrategy, it remains a highly volatile investment.
Investors will be closely watching how GameStop manages its Bitcoin holdings and whether it can generate sustainable value beyond short-term stock gains. As the company navigates its evolving strategy, market analysts will continue to assess whether this bold move will be a game-changer or just another speculative play.
