Video game retailer GameStop Corp. is reportedly exploring investments in bitcoin and other cryptocurrencies, marking a potential strategic shift as the company searches for new ways to leverage its cash reserves.
According to sources familiar with the matter, the company is evaluating alternative asset classes, with a particular focus on bitcoin.
The mere possibility of such a move sent GameStop’s shares soaring by as much as 20% in extended trading, underscoring the ongoing influence of meme stock enthusiasts and the broader crypto market’s appeal to retail investors. However, GameStop has not yet made a final decision, as the company is still determining whether crypto investments align with its long-term business strategy, according to one source.
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GameStop’s crypto speculation gained traction after CEO Ryan Cohen posted a photo on social media platform X (formerly Twitter) featuring Michael Saylor, the co-founder and chairman of MicroStrategy, the largest corporate holder of bitcoin. While this fueled speculation about GameStop following in MicroStrategy’s footsteps, sources clarified that Saylor is not involved in GameStop’s crypto deliberations at this time.
Cohen’s leadership has been closely watched since his 2020 investment in GameStop and his subsequent appointment to the board in 2021, a period that saw GameStop become a defining meme stock during the retail trading mania. While some expected him to spearhead a digital transformation, the company remains a struggling brick-and-mortar retailer in a shifting gaming landscape.
A Rocky Crypto Past: GameStop’s Abandoned Web3 Efforts
GameStop is no stranger to cryptocurrency and blockchain initiatives. In 2022, the company launched crypto wallets that allowed users to manage digital assets, including non-fungible tokens (NFTs). However, by August 2023, the company shut down the service, citing “regulatory uncertainty.”
The company also previously partnered with Immutable X, an Ethereum-based layer-2 scaling solution, to develop an NFT marketplace. While that effort initially attracted attention, the broader collapse of the NFT market and regulatory scrutiny over crypto assets cast doubt on the initiative’s long-term viability.
Given this history, GameStop’s reconsideration of cryptocurrency as an investment raises questions: Is this a genuine strategic pivot, or a move to capitalize on renewed hype in digital assets?
Following the MicroStrategy Playbook?
If GameStop moves forward with a bitcoin investment, it would be mirroring the bold playbook of MicroStrategy, which has transformed itself from a software company into a de facto bitcoin investment vehicle. Since 2020, MicroStrategy has accumulated over 190,000 BTC, making it one of the most aggressive corporate bitcoin holders.
This strategy has proven to be a double-edged sword. While MicroStrategy’s stock has surged alongside bitcoin’s meteoric rise, it has also experienced sharp declines during crypto bear markets.
However, GameStop differs from MicroStrategy in two key ways:
- Core Business Model – MicroStrategy had stable software revenue streams before pivoting to bitcoin, while GameStop is still struggling with declining physical retail sales.
- Investor Base – GameStop has an active and vocal retail investor community, making it more prone to volatility and speculative trading.
Cohen’s Investment Policy and GameStop’s Growing Cash Reserves
One critical factor that could influence GameStop’s crypto decision is its substantial cash reserves. According to a December securities filing, as of November 2, 2023, the company had amassed a $4.6 billion cash pile.
To manage this capital, GameStop’s board approved a new “investment policy” in December 2023, granting Cohen, two independent board members, and other key executives the authority to allocate the company’s funds within set guidelines. If an investment falls outside those parameters, it would require unanimous approval from the committee or a majority vote from the full board.
This governance structure suggests that any move into bitcoin or crypto assets would require internal consensus, making it less likely that the company will take an extreme approach like MicroStrategy’s all-in bitcoin bet.
Meme Stock Frenzy Reignites
GameStop’s stock price reaction—jumping 20% in after-hours trading—denotes that retail investors remain highly engaged with the company’s trajectory. The stock has long been a favorite among traders on platforms like Reddit’s r/WallStreetBets, where speculation often fuels massive price swings.
A potential crypto play could add a new speculative layer to GameStop’s already volatile stock, attracting both enthusiastic retail investors and skeptical institutional analysts.
While GameStop is still evaluating the merits of adding bitcoin to its balance sheet, a final decision has not been made. The company will need to weigh the potential upside of holding a volatile asset against the risks of further financial instability, especially as it navigates ongoing struggles in the gaming retail space.
If GameStop moves forward with a bitcoin investment, it could:
- Signal a strategic shift toward alternative assets, similar to MicroStrategy.
- Reinforce its image as a meme stock, attracting further retail speculation.
- Prompt regulatory scrutiny, given past crypto-related challenges.
On the other hand, if GameStop ultimately decides against investing in crypto, it could indicate that the company is prioritizing more traditional growth strategies rather than speculative financial maneuvers.