GameStop announced plans to allocate part of its $4.8 billion cash reserves to Bitcoin and US-dollar-pegged stablecoins, triggering a 10% surge in stock price.
By Bhushan Akolkar
Updated
3 mins read
GameStop stock price witnessed sharp 10% gains in the after-hour trading on Tuesday, after the firm announced plans of building its own Bitcoin reserve. With this, the American video game firm enters the league of Strategy (former MicroStrategy), Metaplanet, Semler Scientific, Tesla, and other to put BTC to its balance sheet.
Market analysts are turning speculative about whether these BTC plans could trigger yet another frenzy in GME stock rally. Over the last year, GameStop stock is already up 63% after reversing from the crucial support of $11, and currently trading at $27.50. If the market frenzy kickstarts again, it could shoot all the way to its 2021 high of $81.
As per the CNBC report on Tuesday, GameStop is planning to invest a portion of its $4.8 billion corporate cash into Bitcoin and US-dollar-pegged stablecoins. Additionally, the company’s financial statement reads:
“[T]he Company’s investment policy permits investments in certain cryptocurrency assets, including Bitcoin and US dollar-denominated stable coins.”
The company also released its fourth-quarter earnings showing a 5x surge in its cash pile from the past year. As of February 1, GameStop’s cash reserves totaled over $4.77 billion, a significant increase from $921.7 million the previous year. The video game retailer reported net sales of $1.283 billion for the fourth quarter and $3.823 billion for the fiscal year 2024.
These factors will also play a crucial role in driving GameStop stock higher from here, in addition to the company’s Bitcoin plan serving as a catalyst.
Speculation about GameStop’s potential interest in Bitcoin surfaced in February, sparking an uptick in GME stock. Adding to the buzz, GameStop CEO Ryan Cohen shared a photo on social media featuring himself alongside Michael Saylor, Strategy executive chairman and prominent Bitcoin advocate, fueling expectations of a possible Bitcoin acquisition.
Now, nearly 40 days later, the company has disclosed its Bitcoin acquisition plans by following Strategy’s BTC playbook. Earlier this week, Michael Saylor revealed that Strategy had purchased an additional 6,911 Bitcoin, increasing its total holdings to 506,137 BTC. This positions the company as the holder of approximately 2.4% of Bitcoin’s total supply.
Companies like Metaplanet and Strategy have given multifold returns to shareholders in the years following the BTC buying plan. The GameStop stock could see a similar movement over the course of next year.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.