Key Takeaways:
- American video game retail giant GameStop announced plans to hold Bitcoin as a treasury reserve asset. The decision came after its board of directors unanimously voted for the investment policy.
- The company, holding over $4.5 billion in cash, cash equivalents, and marketable securities, will allocate a portion of its cash reserves or future stock issuances to invest in various digital assets, including Bitcoin and USD-pegged stablecoins.
- GameStop released its Q4 2024 earnings report on Tuesday, which showed an increase in net income from the previous fiscal year, but its net sales were down from $5.27 billion in 2023 to $3.82 billion last year.
- CEO Ryan Cohen has been working on plans to revive the company’s fortunes through cost-cutting and new investment strategies. Last month, he met with Strategy chairman Michael Saylor, hinting at potential discussions about adopting Bitcoin into the business.
In a Tuesday press release, video gaming retailer GameStop announced that it has updated its corporate investment policy to include Bitcoin (BTC) as a treasury reserve asset after its board of directors unanimously approved the decision. The update was made in a Form 10-K filing with the U.S. Securities and Exchange Commission (SEC), stating that a portion of the company’s cash or future debt and equity issuances might be used to invest in the flagship cryptocurrency.
GameStop To Allocate Portion of $4.5 Billion Cash Reserves To Purchase Bitcoin
While GameStop did not disclose the size or timing of any initial allocation, it confirmed that Bitcoin will now be considered a critical component of its treasury strategy. The gaming retail chain shared that its digital asset strategy will also include exposure to USD-denominated stablecoins. As of February 1, GameStop holds over $4.5 billion in cash, cash equivalents, and marketable securities. The price of its GME stock jumped over 7% in the after-market following the announcement, while BTC briefly breached $88,500.
The company reported in its 2024 fourth-quarter earnings that its net sales totaled $3.82 billion in 2024, down from the previous fiscal year’s $5.27 billion. Meanwhile, its net income rose from $6.7 million in 2023 to $131.3 million. During the same period, GameStop completed its divestiture in Italy and wound up operations in Germany.
In December, it was reported that the company had been facing challenges as it adjusted to the rise of digital game distribution and changing consumer behavior. According to earlier reports, CEO Ryan Cohen has been cutting costs and streamlining operations as he worked to revive the struggling business.
The long-standing company shot back into prominence during the COVID-19 pandemic when it became the center of a meme stock frenzy that turned its fortunes around. Since then, the video game retail chain has shown significant signs of growth, returning to profitability in the 2023 fiscal year.
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GameStop’s Bitcoin Pivot Has Been In The Making
GameStop’s foray into cryptocurrencies comes amid growing interest among publicly traded companies in holding Bitcoin on their balance sheets as a long-term store of value. The decision is inspired by software firm Strategy (formerly known as MicroStrategy), which is the largest corporate holder of the crypto asset, with over 500,000 BTC, valued at roughly $42.8 billion at current market prices, in its treasury. The firm saw a rapid but volatile rise in its $MSTR stock after investing billions of dollars in Bitcoin.
Crucially, GameStop noted in the SEC filing that its Bitcoin strategy has not been tested and may even prove unsuccessful, and it is continually examining the risks and rewards of the move. The report claimed that Bitcoin markets have “historically” experienced significant volatility in price, limited liquidity and trading volumes, relative anonymity, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges, and other risks inherent to its “entirely electronic, virtual form and decentralized network.”
The decision follows a series of developments over the past couple of months that hinted at the company’s potential pivot toward digital assets. In February, Cohen posted a photo with Strategy founder and chairman Michael Saylor at President Donald Trump’s Mar-a-Lago residence in Palm Beach, Florida.
Shortly after this, Matt Cole, the CEO of Strive Asset Management, sent an open letter to the GameStop CEO urging him to allocate some of the company’s cash reserves to Bitcoin. Cole argued that the video game retail giant could differentiate itself from the competition by adopting a Bitcoin-forward treasury strategy, calling it an incredible opportunity to transform GameStop’s financial future.
While Cohen acknowledged in an X post about receiving the letter, he did not make any official statement until the latest SEC filing revealed the company’s Bitcoin investment strategy. GameStop now joins Strategy, Block, and Tesla in the list of corporate giants holding the apex cryptocurrency in their reserves.
Earlier this week, Saylor announced that Strategy had acquired an additional 6,911 BTC, valued at $603.96 million, bringing its total stockpile to 506,137 Bitcoins. The company now holds roughly 2.4% of Bitcoin’s total supply.