Wall Avenue insurgent GameStop explores Bitcoin funding amid retail struggles

Picture: Victor J. Blue

Key Takeaways

GameStop is contemplating investing in Bitcoin and different digital belongings, although no determination has been made.
GameStop’s Bitcoin talks come at a time when the agency is dealing with operational challenges.

Simply days after GameStop CEO Ryan Cohen and Bitcoin bull Michael Saylor met, information has surfaced that the corporate is now contemplating including Bitcoin and different crypto belongings to its portfolio.

CNBC reported Thursday, citing three sources, that GameStop is setting its sights on digital asset funding. The online game retailer, finest identified for the historic 2021 brief squeeze, had round $4.6 billion in money reserves on the shut of Q3 2024, in keeping with its newest SEC submitting.

Saylor, nonetheless, is just not a part of the corporate’s inside conversations about crypto, sources famous, a minimum of at this stage. And even with these discussions underway, the corporate could in the end resolve in opposition to any investments.

Can Bitcoin save GameStop from its retail struggles?

GameStop is exploring Bitcoin and crypto investments after grappling with a 20% drop in gross sales throughout the third quarter of 2024, regardless of sitting on a $4.6 billion money pile. The gaming retailer’s {hardware} and software program segments each underperformed in comparison with the earlier yr.

The corporate’s brick-and-mortar enterprise mannequin faces mounting strain as digital recreation downloads proceed to reshape the gaming retail panorama.

In keeping with a Looking for Alpha evaluation, GameStop’s declining core enterprise may make it well-positioned to pivot towards changing into a “Bitcoin Shopper Financial institution,” doubtlessly boosting its inventory worth.

GameStop shares (GME) soared as a lot as 20% on the current Bitcoin report, per Yahoo Finance.

The retailer has beforehand ventured into digital belongings, launching an NFT market in July 2022 for buying and selling digital collectibles. Nonetheless, GameStop scaled again this initiative in early 2024, citing “regulatory uncertainty.” The corporate additionally discontinued its crypto pockets service in late 2023 amid regulatory considerations.

Final January, GameStop’s board authorized a revised funding coverage, giving CEO Ryan Cohen and his workforce broader authority to put money into equities and different belongings, increasing past their earlier limitations to short-term, investment-grade revenue securities.