- GameStop (GME) stock surged about 10% in after-hours trading Thursday after reports surfaced that the company is exploring investments in cryptocurrencies, particularly Bitcoin (BTC), though no commitment has been confirmed.
- The speculation was sparked by a social media post from GameStop CEO Ryan Cohen with Michael Saylor, whose company, Strategy (MSTR), has heavily invested in Bitcoin, leading to a 352% increase in its stock over the past year.
- GameStop’s board authorized Cohen in December 2023 to use the company’s $4.6 billion cash reserve for investments, potentially mirroring Strategy’s Bitcoin strategy, amidst a 15% stock decline in the last month with Q4 earnings yet to be reported.
GameStop (GME) stock experienced a significant surge in its stock price, rising about 8% to $28.40 in after-hours trading on Thursday following a CNBC report that the company is considering investments in cryptocurrencies, particularly Bitcoin (BTC). This speculation was fueled by a social media post from GameStop CEO Ryan Cohen, who shared a photo with Michael Saylor, the CEO of Strategy (formerly MicroStrategy) (MSTR), a company known for its substantial Bitcoin holdings. Saylor’s company has transformed into what it now calls “the world’s first and largest bitcoin treasury company,” with its stock appreciating roughly 352% over the past year alongside Bitcoin’s near 100% rally.
CNBC’s report clarified that GameStop’s interest in cryptocurrencies is still in the exploratory phase, with no definitive commitment to invest. However, the news was enough to drive GME’s stock up to as much as 15% after the market closed, although it later gave back some of those gains. This market reaction suggests investor anticipation that Cohen might leverage GameStop’s $4.6 billion in cash and securities to mirror Strategy’s strategy of investing heavily in Bitcoin, as noted by Sherwood analyst Luke Kawa.
Cohen’s authority to use GameStop’s capital for investments was established by the company’s board in December 2023, hinting at a potential shift towards a model similar to that of holding companies like Daily Journal Corp. (DJCO) or Berkshire Hathaway (BRK-A, BRK-B). This move could represent a strategic pivot for GameStop, which has seen its share price fluctuate significantly, reaching a high of $64 in May 2024 during a meme stock surge but since declining by about 15% over the last month.
The company has not yet released its fourth-quarter earnings, which adds an element of uncertainty to its financial standing and investor expectations. GameStop’s exploration into cryptocurrencies, if realized, could potentially diversify its business model beyond traditional retail, possibly revitalizing investor interest and providing a new narrative for the company’s future, especially in light of its recent struggles in the retail sector. However, the volatile nature of cryptocurrencies and the speculative bubble around meme stocks suggest that any such investment would carry significant risks alongside potential rewards.
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