GameStop Corp. (GME) stock experienced a surge of approximately 5% in early trading on Friday following a CNBC report indicating the video game retailer is considering investing in cryptocurrencies, including Bitcoin (BTC-USD). While CNBC clarified that GameStop may not ultimately proceed with these investments and is still in the exploratory phase, the news triggered a significant market reaction. GME stock jumped as much as 20% in after-hours trading on Thursday before partially retracing those gains.
A weekend social media post by GameStop Chairman Ryan Cohen fueled speculation about the company’s interest in cryptocurrency. Cohen posted a picture on X featuring himself with MicroStrategy (MSTR) Chairman Michael Saylor. Saylor is renowned for his company’s substantial investment in Bitcoin, with holdings exceeding 447,000 tokens. MicroStrategy recently rebranded itself as Strategy, proclaiming itself “the world’s first and largest bitcoin treasury company.” Strategy’s stock has soared roughly 370% over the past year, mirroring Bitcoin’s impressive rally.
The positive market response to Cohen’s post suggests investors are anticipating GameStop might emulate Strategy’s Bitcoin acquisition strategy. Sherwood Capital’s Luke Kawa noted that investors may be wagering on GameStop utilizing a portion of its substantial cash reserves, estimated at $4.6 billion, to follow Saylor’s lead and invest heavily in Bitcoin.
In December 2023, GameStop’s board authorized Cohen to make investment decisions utilizing the company’s capital. This move positioned the video game retailer to operate similarly to a holding company, akin to the Daily Journal (DJCO) or Berkshire Hathaway (BRK-B, BRK-A).
Following a meme stock resurgence in May 2024, which propelled GME stock to a high of $64 per share, the stock has experienced a decline, losing approximately 15% in the past month. GameStop has yet to release its fourth-quarter earnings report.
While the potential for GameStop’s entry into the cryptocurrency market has generated excitement among investors, it’s crucial to remember that the company has not confirmed any concrete plans. The exploration of cryptocurrency investment remains a possibility, not a certainty. The market’s reaction underscores the significant influence of speculation and social media sentiment on GameStop’s stock price.
