Videogame seller GameStop said it will now include bitcoin in its financial investments, and investors are piling in.
GameStop rose 8.3% after hours on Tuesday following the company’s announcement that its board approved investing its cash and future debt into bitcoin. Shares of the struggling retailer jumped despite the company reporting a fourth-quarter revenue decline of 28%, to $1.28 billion, compared to the same period in 2023.
Last month, GameStop gained 10% after CNBC reported that the company was considering investing in bitcoin and other cryptocurrencies using its $4.6 billion cash pile.
GameStop’s move echoes the actions of software maker Strategy, which has been stockpiling bitcoin since October. Last week, the company added $10.7 million of the cryptocurrency, adding to its existing $41.6 billion of bitcoin. In early February, GameStop’s CEO Ryan Cohen hinted at a similar decision by posting a photo of himself and Strategy cofounder Michael Saylor on X.
GameStop said it has not set a cap on the amount of the cryptocurrency it will hold and said that it can sell any bitcoin it acquires.
The decision comes weeks after pro-crypto President Donald Trump signed an executive order establishing a strategic reserve of cryptocurrencies using tokens already owned by the government.
Companies including Tesla, Coinbase, Riot Platforms, and Block have invested in bitcoin. Some investors see companies with large bitcoin holdings as a safer proxy to investing in the cryptocurrency than doing it themselves.
Bitcoin is up 24% in the past year, boosted by a crypto-friendly US presidential administration.
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Memestock frenzy
GameStop, which sells physical games and hardware, has been grappling with changes to the video gaming industry as more people shift toward digital downloads and streaming.
It was a major winner in the meme stock mania of January 2021, which involved throngs of inexperienced investors using the trading app Robinhood to buy stocks of companies they wanted to support. GameStop’s stock has risen over 2,200% in the last five years but is down 19% so far this year.
Robinhood faced backlash for suddenly restricting trading on these meme stocks and for gamifying short-term investing, which critics say poses serious financial risks.
In 2021, Robinhood CEO Vlad Tenev and Wall Street hedge fund managers were questioned in a congressional inquiry into the GameStop trading event. In 2023, a federal judge dismissed the lawsuit, saying that customer agreements allowed Robinhood to limit transactions.
