GameStop Gains Board Approval to Adopt Strategy’s Bitcoin Treasury Approach

GameStop Eyes Bitcoin Investment Amid Struggling Retail Business

In a strategic move to boost its financial standing, GameStop, the video game retailer that became a sensation during the 2021 meme stock craze, has decided to add Bitcoin to its balance sheet.

The company is following in the footsteps of Strategy (formerly MicroStrategy), the software giant that has invested billions in the cryptocurrency, drawing attention from investors and the market alike.

A Bold Step Towards Cryptocurrency

GameStop’s board has approved a plan to purchase Bitcoin, marking a significant shift in its corporate strategy.

The Grapevine-based company intends to use part of its cash reserves or raise funds through debt or equity to buy Bitcoin and potentially stablecoins.

As of 1 February 2025, GameStop had nearly $4.8 billion in cash.

However, the firm did not specify how much Bitcoin it plans to acquire, leaving the door open for future decisions.

Ryan Cohen's Push for Revitalisation

CEO Ryan Cohen, who has been leading GameStop’s efforts to pivot from its declining physical retail business, hinted at the move earlier this year.

In a post on the X social media platform, Cohen shared a picture with Michael Saylor, the founder of Strategy, sparking speculation about GameStop’s entry into cryptocurrency.

The company's stock saw a 6% increase in after-hours trading following the announcement.

Bitcoin as a Treasury Reserve Asset

GameStop’s decision to buy Bitcoin comes at a time when companies across various sectors are experimenting with the digital asset.

Strategy, the largest corporate holder of Bitcoin, started the trend in 2020, when its CEO Michael Saylor began using corporate funds to buy Bitcoin as a hedge against inflation.

Since then, many companies, from tech startups to hotel developers, have followed suit.

GameStop's move is part of this wider trend of businesses adding Bitcoin to their treasury reserves in hopes of capitalising on its long-term potential.

Following the announcement, Saylor expressed his support on X, stating,

"Welcome to Team Bitcoin."

Revenue Decline and Cost-Cutting Efforts

Despite this bold financial manoeuvre, GameStop is still grappling with the challenges of its core business.

The company reported a 28% drop in fourth-quarter revenue, down to $1.28 billion from $1.79 billion in the same period last year.

Sales of video game hardware, accessories, and software have all seen a decline, while collectible sales showed some growth.

However, GameStop managed to boost its profitability through aggressive cost-cutting measures.

Its net income for the fourth quarter more than doubled, rising to $131.3 million from $63.1 million a year ago.

The company has been focusing on streamlining operations and reducing overheads, including the closure of 590 stores in 2024, with more planned closures in the coming fiscal year.

Risk and Volatility of Bitcoin Investment

As part of its new strategy, GameStop acknowledged the risks associated with investing in Bitcoin.

The company stated in its filing with the U.S. Securities and Exchange Commission,

"Bitcoin, for example, is a highly volatile asset and has experienced significant price fluctuations over time."

It further noted that its Bitcoin strategy "has not been tested and may prove unsuccessful."

While Bitcoin has surged in value over recent years, reaching near $100,000 before experiencing an 18% decline, GameStop is aware that the cryptocurrency market remains unpredictable.

The company’s entry into the digital asset space represents a calculated risk in a bid to rejuvenate its business and attract investors looking for exposure to Bitcoin without directly holding the asset.

Can Bitcoin Turn the Tide?

Despite the volatility, the stock market's appetite for Bitcoin-backed companies is clear.

Firms with significant Bitcoin holdings on their balance sheets, such as Strategy, have seen their stock prices rise dramatically as investors seek indirect exposure to the cryptocurrency.

GameStop is hoping that its investment in Bitcoin, alongside its efforts to reduce costs and streamline operations, will offer a much-needed boost to its stock price and financial health in the long term.