Josh Weiner
GameStop (GME) shares jumped nearly 15% on Wednesday following the company’s announcement that it will allocate a portion of its cash reserves to Bitcoin (BTC-USD).
In a statement released Tuesday, GameStop confirmed that its board of directors unanimously approved a policy update to designate Bitcoin as a treasury reserve asset. This move comes roughly a month after reports surfaced indicating the company was considering cryptocurrency investments.
Speculation over GameStop’s interest in Bitcoin intensified on February 8 when CEO Ryan Cohen posted a picture on social media with MicroStrategy (MSTR) CEO Michael Saylor. MicroStrategy has been a high-profile Bitcoin investor, holding more than 447,000 tokens as of its latest filing in February. Saylor’s Bitcoin-centric approach has significantly benefited his company, with its stock surging over 84% in the past year as Bitcoin’s value climbed.
Despite the market’s initial enthusiasm, analysts remain cautious about GameStop’s strategic shift. Wedbush analyst Michael Pachter noted that GameStop has altered its corporate direction multiple times in recent years.
“The idea that GameStop can replicate MicroStrategy’s success is flawed,” Pachter stated. “MicroStrategy trades at about twice the value of its Bitcoin holdings. If GameStop were to convert its entire $4.6 billion in cash into Bitcoin and follow the same valuation pattern, its stock price would actually decline.”
GameStop’s latest earnings report, released after the market closed on Tuesday, reflected ongoing challenges in its core business. The company reported fourth-quarter net sales of $1.28 billion, a 28% year-over-year decline. Additionally, its full-year adjusted EBITDA fell to $36.1 million, down from $64.7 million in the previous year.
While the Bitcoin investment has generated excitement among retail investors, industry experts remain divided on whether this pivot will yield long-term benefits for the company.
