The old internet celebrity of the US stock market, GameStop, is rumored to be "holding coins" as its founder takes a friendly photo with Saylor

Author: BitpushNews Mary Liu

On February 13, New York time, the game retailer GameStop saw its stock price surge significantly in after-hours trading due to news that it might invest in Bitcoin and other cryptocurrencies.

According to sources cited by CNBC, GameStop is considering investing in cryptocurrencies like Bitcoin. Following the news, its stock price soared by 20% in after-hours trading, before retreating to around $26.34.

GameStop has gained fame in recent years as a "meme stock," experiencing a dramatic price surge in 2021 driven by retail investor Keith "Roaring Kitty" Gill, followed by a downturn. In 2024, Gill's multiple appearances again propelled a rebound in GameStop's stock price. However, despite the volatility in stock prices, GameStop's actual business performance has not been optimistic.

Poor Performance, GameStop Faces Pressure to Transform

As a retailer primarily focused on physical stores for games and collectibles, GameStop has struggled in recent years amid the industry's overall shift towards digital transformation.

Wall Street's attention on GameStop has been low. Wedbush analyst Michael Pachter reiterated a "underperform" rating for GameStop in a recent report, setting a target price of $10, which implies that the company's actual value is nearly zero after accounting for cash.

Pachter noted, "The company plans to return to a growth trajectory but faces insurmountable obstacles." GameStop's core business—physical game sales—is being impacted by digital downloads and cloud gaming, leading to a continuous decline in revenue and profits. Although the company has achieved short-term profitability through cost-cutting and operational optimization, its long-term growth prospects remain bleak.

Could Bitcoin Investment Be a Hope for a Turnaround?

GameStop's exploration of cryptocurrencies began in 2022 when the company launched a crypto wallet that allows users to manage cryptocurrencies and NFTs. It partnered with industry players like the gaming network Immutable to support the trading of in-game assets, avatars, and other digital collectibles.

However, due to "regulatory uncertainty," the company shut down its NFT marketplace in early 2024. Nevertheless, GameStop has not completely abandoned its interest in the crypto space.

The news of potential Bitcoin investment comes at a time following the election of U.S. President Trump. Trump promised to support the cryptocurrency industry during his campaign, which may be one reason for GameStop to reconsider its investments in the crypto space.

Notably, GameStop CEO Ryan Cohen was photographed with MicroStrategy co-founder and executive chairman Michael Saylor last week, further fueling market speculation.

MicroStrategy is the world's largest corporate holder of Bitcoin, with its Bitcoin reserves valued at over $46 billion. Since it began accumulating Bitcoin in 2020, MicroStrategy has reaped substantial rewards and inspired more companies to include Bitcoin on their balance sheets.

Sherwood analyst Luke Kawa pointed out that GameStop's stock price rose after Ryan Cohen tweeted, suggesting that investors might be betting on GameStop emulating MicroStrategy's Bitcoin purchasing strategy.

Analysts stated, "The market's enthusiastic response to Cohen's tweet indicates that traders hope Cohen will use GameStop's $4.6 billion in cash and cash-equivalent securities to follow Michael Saylor's approach. (That strategy has only one rule: buy Bitcoin)."

Whether GameStop will officially enter the cryptocurrency space remains unconfirmed, but this news undoubtedly adds new imaginative possibilities for the market.

$4.6 Billion in Cash Reserves, How Will Ryan Cohen Lead GameStop Out of Trouble?

Ryan Cohen is the co-founder of e-commerce company Chewy, who purchased GameStop stock in 2020 and joined the board in 2021. Under his leadership, GameStop has begun focusing on cost-cutting and streamlining operations to ensure the profitability of its business, although its growth remains sluggish. As of November 2, 2023, GameStop has accumulated $4.6 billion in cash reserves and has been utilizing these funds for investments.

In December 2023, GameStop's board approved a new "investment policy" allowing Cohen, two independent board members, and other necessary personnel to manage the company's securities portfolio. These investments must comply with policy guidelines or be approved by a unanimous vote of the committee or a majority vote of the board.

Despite facing dual pressures from declining performance and industry transformation, Bitcoin, as a high-volatility, high-return emerging asset, may provide GameStop with a new growth path. Whether GameStop can leverage its Bitcoin holdings to stage a successful comeback remains highly uncertain.