April 1, 2025
iStock/RiverNorthPhotography
Should GameStop Be Buying Bitcoin?
GameStop’s shares rose 11.7% last Wednesday after revealing it had adopted Bitcoin as a treasury reserve asset, but then fell 22.1% the following day after issuing $1.3 billion in convertible debt, with the proceeds to be used in part to buy the cryptocurrency.
GameStop helped ignite a “meme” stock craze in early 2021, when GameStop’s stock price soared above $120. Shares are now trading at about $22 as the core video gaming business continues to face intense competition from digital gaming and streaming.
The retailer last week reported sales for 2024 reached $3.8 billion, tumbling 27.5% year-over-year. Cost reductions enabled GameStop to post an operating profit in the year.
Since Ryan Cohen took over as CEO in 2023, GameStop has been streamlining the business, closing stores and selling some international operations. Last year, it closed 966 stores, ending with 3,203.
Going forward, GameStop said in its 1O-K that beyond cost reductions, its focus is on improving omnichannel offerings and expanding offerings and services, including collectibles. However, it also plans to close a “significant number of additional stores” in 2025, indicating the core business continues to flounder.
One bright spot is its $4.8 billion cash position at year-end as GameStop benefited from timely equity offerings during one of the stock’s volatility episodes in 2024.
GameStop’s updated investment policy comes as the price of Bitcoin, the world’s largest cryptocurrency, soared past an all-time high in December following the election of President Donald Trump, who has vowed to make the U.S. “the crypto capital of the world.”
GameStop joins the ranks of Strategy (formerly Microstrategy), Metaplanet, and Samara Asset Group as the fourth publicly listed company to issue debt to purchase Bitcoin. Strategy, the world’s largest corporate holder of Bitcoin, has seen its shares climb along with the crypto’s gains.
Even more companies with large cash balances are adopting Bitcoin as a treasury reserve to diversify assets, hedge against inflation, and enhance business transaction flexibility. Adam O’Brien, CEO of Bitcoin exchange Bitcoin Well Inc., told MarketWatch, “It gives these companies an opportunity to breathe and figure out how to innovate. Over the next decade, companies will realize that bitcoin is a safe haven for capital over the long term.”
Nick Ward, a contributor to Bitcoin Magazine, wrote, “For CFOs thinking in 3, 5, or 10-year increments, the case for allocating even a small portion of excess cash to Bitcoin is no longer fringe.”
However, GameStop’s share collapse following news of the debt offering, which came at a big premium to the company’s value, shows many on Wall Street aren’t convinced.
Michael Pachter, an analyst at Wedbush who has long had an “underperforming” rating on GameStop, stated in a note, “We find it hard to understand why any investor would be pay more than two times cash value for the potential for GameStop to convert that cash into Bitcoin, particularly since the same investors can invest in Bitcoin or a Bitcoin ETF themselves.”
GameStop said Bitcoin purchases could expose it to volatility associated with cryptocurrency prices. Bitcoin prices are now about 20 percent off their recent highs.
BrainTrust
Neil Saunders
Managing Director, GlobalData
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Cathy Hotka
Principal, Cathy Hotka & Associates
Recent Discussions
Discussion Questions
What do you think of GameStop’s moves to make Bitcoin a treasury reserve asset, as well as the sale of convertible bonds in part to support cryptocurrency purchases?
Do you see a turnaround strategy for GameStop’s core video game retailing business, or does it have to reinvent itself with its cash hoard?
Poll
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The core business of GameStop is challenged as digitalization in gaming increases and fewer customers need to go to physical stores. This writing has been on the wall for a long time, and it can be seen in the poor sales numbers coming from GameStop. So, for its next act, GameStop is getting into Bitcoin as a treasury reserve asset.
In my view, the pivot to Bitcoin is really a defense against irrelevance. It’s an odd thing as it’s basically saying a key part of the strategy isn’t retail but is to act as some kind of cryptocurrency investment vehicle. Of course, it solves none of the underlying retail issues.
Oh yes…happy April Fools, everybody!
There is a very fine line between fact and fiction these days…
Indeed: my face fell when I got to the end….and it just ended!
Wait…so is this real or not?
Yes, it is real. They announced it last week during earnings.
In addition to introducing significant volatility and financial risks, GameStop’s strategy to diversify its treasury with Bitcoin could result in potential gains if cryptocurrency values rise. That’s a big “if.”
Due to the highly unpredictable nature of the cryptocurrency market, this move may negatively impact GameStop’s financial stability. The fluctuation in Bitcoin’s value may result in significant swings in the asset valuation of the company, affecting investor confidence.
GameStop may also face substantial financial losses should Bitcoin prices fall sharply, straining its financial resources. Bitcoin’s value can fluctuate dramatically, exposing it to potential financial losses if the market becomes unfavorable.
Moreover, issuing convertible bonds to fund these purchases might result in an increase in debt levels and impact the financial stability of the company if the expected returns do not materialize.
In order to diversify its investment portfolio, GameStop may want to allocate funds to traditional assets such as stocks, bonds, or real estate, which have a lower volatility level than cryptocurrencies.
The company may also consider forming strategic partnerships or investing in emerging technologies that complement its core business operations and create synergistic growth opportunities.
Implementing hedging strategies to offset potential losses in cryptocurrency investments could also help stabilize its financial position.
.
The IRS ruled it property. That’s a problem. I thought bitcoin was interesting until they did that.
oh yeah, Overstock’s CEO at the time bought a bunch didn’t work out so well for him.
In the words of Nancy Reagan, “Just Say No.”
In the words of her husband, Ronald, “the more the plans fail, the more the planners plan”
A house built of cards should probably not add poker chips on top and expect to stand for long. However if they are looking for another short term flash, like their brief Robin Hood stock novelty, this does align with their gaming culture. In truth they have nothing to lose. Might as well go down having some fun with the core customers who have stayed with them through it all.
This is an absurd question about the viability of Bitcoin compared to the viability of Gamestop. Bitcoin is not a viable treasury reserve vehicle, when we have access and a preference for the best treasury reserve, the US dollar. The US dollar is based upon the credibility and goodstanding of the US dollar. It stands alone as the most valuable currency in the world and the gold standard upon which all others are compared to. Plus certain assets are only traded using US dollars to buy and sell them (like oil). Add to this that every country in the world keeps part of their treasury reserves in US dollars, based here in the USA. Since the US Treasury protects all US dollars, and our robust banking system maintains established protocols to secure all US dollar deposits, the value of the US dollar is never in question. This is not the case with Bitcoin, which was created to avoid detection, avoid paying taxes, and has no true value to it, save market demand at any point in the day. There are no assets, no standards, and little history upon which to invest in this digital currency.
From Corporate Crisis to Complete Recovery: The Recovery Team Difference”
“Our security team discovered the breach too late – attackers had already established SOCKS5 proxy channels on multiple devices and stolen authentication cookies to initiate withdrawals. The blockchain forensic experts at Crtteam implemented a recovery strategy that included: 1) Complete smart contract audit 2) Cross-chain digital triangulation 3) Exchange coordination for fund recovery. Their systematic approach resulted in the successful return of 47.4 BTC we had considered permanently lost. For any organization facing cryptocurrency theft, I cannot recommend strongly enough that you immediately document all suspicious activity and contact I can’t thank ‘Crtteam’ enough via tele~gram or cryptorecoveryteam via outlook mailing system with the complete evidence package. Their institutional knowledge and technical capabilities represent the pinnacle of blockchain forensic investigation
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The core business of GameStop is challenged as digitalization in gaming increases and fewer customers need to go to physical stores. This writing has been on the wall for a long time, and it can be seen in the poor sales numbers coming from GameStop. So, for its next act, GameStop is getting into Bitcoin as a treasury reserve asset.
In my view, the pivot to Bitcoin is really a defense against irrelevance. It’s an odd thing as it’s basically saying a key part of the strategy isn’t retail but is to act as some kind of cryptocurrency investment vehicle. Of course, it solves none of the underlying retail issues.
Oh yes…happy April Fools, everybody!
There is a very fine line between fact and fiction these days…
Indeed: my face fell when I got to the end….and it just ended!
Wait…so is this real or not?
Yes, it is real. They announced it last week during earnings.
In addition to introducing significant volatility and financial risks, GameStop’s strategy to diversify its treasury with Bitcoin could result in potential gains if cryptocurrency values rise. That’s a big “if.”
Due to the highly unpredictable nature of the cryptocurrency market, this move may negatively impact GameStop’s financial stability. The fluctuation in Bitcoin’s value may result in significant swings in the asset valuation of the company, affecting investor confidence.
GameStop may also face substantial financial losses should Bitcoin prices fall sharply, straining its financial resources. Bitcoin’s value can fluctuate dramatically, exposing it to potential financial losses if the market becomes unfavorable.
Moreover, issuing convertible bonds to fund these purchases might result in an increase in debt levels and impact the financial stability of the company if the expected returns do not materialize.
In order to diversify its investment portfolio, GameStop may want to allocate funds to traditional assets such as stocks, bonds, or real estate, which have a lower volatility level than cryptocurrencies.
The company may also consider forming strategic partnerships or investing in emerging technologies that complement its core business operations and create synergistic growth opportunities.
Implementing hedging strategies to offset potential losses in cryptocurrency investments could also help stabilize its financial position.
.
The IRS ruled it property. That’s a problem. I thought bitcoin was interesting until they did that.
oh yeah, Overstock’s CEO at the time bought a bunch didn’t work out so well for him.
In the words of Nancy Reagan, “Just Say No.”
In the words of her husband, Ronald, “the more the plans fail, the more the planners plan”
A house built of cards should probably not add poker chips on top and expect to stand for long. However if they are looking for another short term flash, like their brief Robin Hood stock novelty, this does align with their gaming culture. In truth they have nothing to lose. Might as well go down having some fun with the core customers who have stayed with them through it all.
This is an absurd question about the viability of Bitcoin compared to the viability of Gamestop. Bitcoin is not a viable treasury reserve vehicle, when we have access and a preference for the best treasury reserve, the US dollar. The US dollar is based upon the credibility and goodstanding of the US dollar. It stands alone as the most valuable currency in the world and the gold standard upon which all others are compared to. Plus certain assets are only traded using US dollars to buy and sell them (like oil). Add to this that every country in the world keeps part of their treasury reserves in US dollars, based here in the USA. Since the US Treasury protects all US dollars, and our robust banking system maintains established protocols to secure all US dollar deposits, the value of the US dollar is never in question. This is not the case with Bitcoin, which was created to avoid detection, avoid paying taxes, and has no true value to it, save market demand at any point in the day. There are no assets, no standards, and little history upon which to invest in this digital currency.
From Corporate Crisis to Complete Recovery: The Recovery Team Difference”
“Our security team discovered the breach too late – attackers had already established SOCKS5 proxy channels on multiple devices and stolen authentication cookies to initiate withdrawals. The blockchain forensic experts at Crtteam implemented a recovery strategy that included: 1) Complete smart contract audit 2) Cross-chain digital triangulation 3) Exchange coordination for fund recovery. Their systematic approach resulted in the successful return of 47.4 BTC we had considered permanently lost. For any organization facing cryptocurrency theft, I cannot recommend strongly enough that you immediately document all suspicious activity and contact I can’t thank ‘Crtteam’ enough via tele~gram or cryptorecoveryteam via outlook mailing system with the complete evidence package. Their institutional knowledge and technical capabilities represent the pinnacle of blockchain forensic investigation