GameStop’s New Crypto Investment Strategy Boosts Stock Price

GRAPEVINE, Texas (AP) — GameStop's stock experienced a notable rise of 7% late Tuesday following the announcement that the video game retailer plans to invest a portion of its cash reserves in cryptocurrency.

Although specific details about the investment were not disclosed, GameStop stated that its board of directors has approved changes to the company's investment policy. This allows the company, based in Grapevine, Texas, to convert some of its cash into Bitcoin, a digital currency that has gained popularity, particularly since the election of President Donald Trump in November. This election brought changes to the regulatory environment, which previously imposed strict oversight on the cryptocurrency market. As of early February, GameStop reportedly held approximately $4.8 billion in cash.

The news of GameStop's potential foray into Bitcoin sparked excitement among investors, leading the company's notoriously volatile shares to increase by $1.83, reaching $27.83 during after-hours trading. Even if the stock maintains similar momentum during regular trading hours, it remains significantly lower than its highest price of $64.83 reached in the past year. This peak occurred last May when prominent investor Keith Gill, also known as “Roaring Kitty,” publicly expressed his support for GameStop after a three-year absence from the online platform.

Gill's return rekindled memories of the “meme stock” phenomenon he was instrumental in creating in early 2021, which saw GameStop's shares soar past $120. Despite achieving such highs, the company faced substantial financial challenges, including cumulative losses exceeding $1.3 billion over the past three years as its sales declined. However, GameStop managed to earn $131 million on $3.8 billion in sales during its most recent fiscal year.

The decision to invest in Bitcoin could signal a new direction for GameStop as it attempts to harness the growing interest in digital currencies to bolster its financial position and appeal to a broader range of investors.

GameStop, Bitcoin, Cryptocurrency