A variety of companies ranging from medical tech provider to hotel developer have been inspired by the rise of Strategy
[NEW YORK] GameStop, the struggling video-game retailer that became a favourite of retail traders during the meme stock frenzy in 2021, said its board has approved a plan to add Bitcoin as a treasury reserve asset.
The Grapevine, Texas-based firm is joining a growing list of public companies experimenting with using corporate cash or borrowed money to buy the digital asset in a bid to capitalise on the surge in Bitcoin. The gambit was pioneered by Michael Saylor’s Strategy, the enterprise software company formally known as MicroStrategy that has acquired more than US$40 billion in Bitcoin and seen its share price soar.
Last month, GameStop chief executive officer Ryan Cohen teased at the idea, posting a picture of himself and Saylor on the X social media platform. Shares of GameStop rose about 6 per cent in after hours trading. The stock is down about 19 per cent so far this year.
A variety of companies ranging from medical tech provider to hotel developer have been inspired by the rise of Strategy. The stock has increased over 2,600 per cent since co-founder Saylor began investing the company’s cash into Bitcoin as a hedge against inflation in 2020. The cryptocurrency is up close to 700 per cent during the same period.
A wave of companies that have followed Strategy’s footstep have seen their stock prices soar after announcing plans to buy Bitcoin. Public companies that have a significant Bitcoin holding on their balance sheet have seen inflows from investors that want to gain exposure to the asset class in the stock market while not dealing with Bitcoin directly. A number of Bitcoin mining companies such as Mara Holdings and Riot Platforms as well as crypto exchange Coinbase Global have also been proxies of Bitcoin in that market.
While GameStop has a struggling underlying business, it rose to fame when meme-stock traders piled into its shares amid the retail-trading frenzy during the pandemic, in which short-sellers of such stocks suffered a short-squeeze as retail traders sent the stock prices soaring.
GameStop made the announcement while reporting that fourth quarter revenue declined 28 per cent to US$1.28 billion from the year-ago period. Sales of hardware and accessories, software both declined in the quarter, while collectible sales rose. BLOOMBERG
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