Video game retailer GameStop (GME) announced in its Q4 and fiscal 2024 earnings report on Tuesday that it will begin dipping into its cash pile to buy bitcoin.
The company said its board unanimously approved the move, which had been widely anticipated.
GameStop plans to allocate a portion of its cash — or proceeds from future debt and equity issuances — toward bitcoin and U.S. dollar-denominated stablecoins.
GME rose 6% in extended trading following the announcement.
For the fourth quarter, the company reported net sales of $1.3 billion, down from $1.8 billion in the same quarter a year ago. Full-year net sales came in at $3.8 billion — a steep drop from $5.3 billion in 2023.
Despite its business struggles, GameStop held about $4.8 billion in cash as of Feb. 1 — a war chest made possible by its status as the most famous meme stock.
Shares jumped 9.2% earlier this month after CNBC reported that GameStop was weighing a move into bitcoin.
The report followed a post from CEO Ryan Cohen, who shared a photo of himself with Strategy (fka MicroStrategy) CEO and bitcoin evangelist Michael Saylor on X.
Strive Asset Management CEO Matt Cole also urged Cohen to pursue the strategy in a letter last month.
“We believe GameStop has an incredible opportunity to transform its financial future by becoming the premier Bitcoin treasury company in the gaming sector,” Cole wrote.
“With nearly $5 billion in cash on its balance sheet, the firm is uniquely positioned to shift its reserves from a shrinking asset to a growth engine, propelling GameStop from meme stock to market leader one Bitcoin at a time.”
Strive’s clients hold GME shares through the firm’s ETFs.
Strive was co-founded by former presidential candidate Vivek Ramaswamy, who also briefly co-led the Department of Government Efficiency (DOGE) with Elon Musk.
Critics: GameStop has no strategy
While Cole will no doubt welcome the move, not everyone sees it as a viable path forward.
Wedbush analyst Michael Pachter dismissed any hope that GameStop can salvage its core business.
“The company has once again accelerated store closures in an attempt to save its way to prosperity, and its plans to enter the trading-card business and to invest in cryptocurrency are striking in their lack of specificity,” he wrote in a note Monday.
Pachter told Barron’s that the most likely outcome is continued liquidation — selling off assets and closing more stores as leases expire.
“With no clear strategy to leverage its store base, management appears to be planning a withdrawal from its core business and hoping that its entry into a wildly fragmented trading-card business or investment in crypto can drive it to profitability despite its utter lack of competitive advantage,” he added.
Economist Peter Schiff was equally skeptical, calling the bitcoin play “another Hail Mary” for “a company with no viable business plan.”
With digital downloads now accounting for 89% of video game sales, GameStop’s brick-and-mortar model has all but collapsed.
Still, GME is up 68.9% over the past 12 months — proof that the meme stock trade isn’t dead just yet.
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