GameStop says it’s adding Bitcoin as a Treasury reserve asset

GameStop just pulled a MicroStrategy, as the company whose meme stock is every retail investor’s favorite, said Tuesday it will start buying Bitcoin with corporate cash. GameStop’s board signed off on the plan unanimously, according to CNBC.

The announcement confirmed reporting from February that the video game retailer was looking to add Bitcoin and other crypto to its balance sheet. Wall Street’s Jimmy Cramer was quick to comment, saying on X that: “Gamestop is finally doing my bitcoin ploy!!” We have absolutely no idea what that means right now.

Anyway, after the announcement, GameStop shares rose more than 6% in after-hours trading, per data from CNBC. As of February 1, the company held around $4.8 billion in cash. That’s the pile it plans to dip into for Bitcoin purchases, though it also said it might use future debt or equity raises to do the same. GameStop did not set a limit for how much Bitcoin it’s willing to buy.

The company is following the same approach that Michael Saylor took at MicroStrategy, now rebranded as Strategy. That firm has been stacking Bitcoin since 2020, buying billions over the years and transforming from a software company into a corporate Bitcoin holding machine. The result? Strategy’s stock has exploded — with plenty of volatility along the way.

GameStop copies Strategy’s Bitcoin playbook with no cap set on buys

The plan is part of a wider effort from CEO Ryan Cohen to make GameStop less of a dying brick-and-mortar chain and more of a lean, cash-heavy machine. Ryan, who joined GameStop’s board in 2021, has been cutting spending and simplifying operations ever since. The goal? Profitability — even if the business itself isn’t growing.

The company’s most recent numbers gave investors something to cheer about. For Q4, GameStop reported $131.3 million in net income, more than double what it earned in the same quarter the year before, which came in at $63.1 million.

Ryan, who co-founded pet e-commerce site Chewy, bought a stake in GameStop in 2020. That was right before the company became the face of the meme stock trading craze.

Investors piled into the stock, convinced that Ryan’s online retail background could help move the company into the modern era. But the transition hasn’t been smooth. GameStop has struggled to keep up with how gamers spend their money now.

Still, Ryan has managed to keep the company loaded with cash. As of November 2, 2023, GameStop had $4.6 billion in cash on hand, according to a December filing with the SEC. The company has been using that cash to invest — and now that includes Bitcoin.

The crypto thing isn’t totally new for GameStop. In 2022, the company rolled out crypto wallets for managing crypto and NFTs. That didn’t last. The service was shut down in 2023, with the company blaming “regulatory uncertainty” for the decision.

Last month, Ryan posted a picture on X with Saylor, the Strategy chairman and face of the corporate Bitcoin movement. But according to CNBC, Saylor isn’t involved in GameStop’s crypto investment decisions.

In December 2023, GameStop’s board approved a new investment policy. That policy allows Ryan and two independent directors to manage the company’s investment portfolio. Other staff members can be brought in if needed. All investments must follow the rules in that policy, unless the committee votes unanimously or the full board signs off by majority vote.

That means this new Bitcoin move had to pass that filter, and it did — unanimously. Still, the company didn’t say exactly when it will start buying or how much it plans to get. All we know is that they’re serious enough to change their financial playbook.

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