Cologne, Germany – GameStop, the video game retailer, made a groundbreaking announcement on Tuesday as its board unanimously agreed to a plan to invest in bitcoin using its corporate cash. This decision mirrors the approach taken by MicroStrategy, a software company that gained notoriety for its substantial bitcoin purchases. This move caused GameStop’s stock to surge by over 6% in after-hours trading, confirming previous reports that the company had intentions to diversify its balance sheet to include bitcoin and other cryptocurrencies.
With nearly $4.8 billion in cash as of February 1, GameStop disclosed that it could allocate a portion of its funds or future debt and equity issuances towards bitcoin and U.S. dollar-denominated stablecoins. This decision comes as part of CEO Ryan Cohen’s strategy to revitalize the struggling brick-and-mortar business. Under his leadership, GameStop has been making efforts to cut costs and streamline operations to ensure profitability.
By venturing into the world of cryptocurrencies, GameStop acknowledges the volatility inherent in these digital assets. The company recognized the risks involved, stating, “Bitcoin, for example, is a highly volatile asset and has experienced significant price fluctuations over time. Our Bitcoin strategy has not been tested and may prove unsuccessful,” in a filing. This cautious approach demonstrates the company’s awareness of the challenges ahead.
Following MicroStrategy’s footsteps, GameStop’s bold move signifies a new chapter in its business operations. This decision could potentially expose the company to the unpredictable nature of cryptocurrency markets. Additionally, GameStop’s recent fourth-quarter results, showing a significant increase in net income from the previous year, have heightened investor optimism about the company’s future prospects.
As the world’s largest cryptocurrency, bitcoin has experienced a tumultuous journey, with its value reaching unprecedented highs before correcting by approximately 18% to around $88,000 per coin. Despite the uncertainties surrounding the crypto market, GameStop’s decision to embrace digital assets reflects a bold step towards adapting to changing financial landscapes and transforming its business model.
