Analysts Skeptical as Retailer Follows MicroStrategy’s Crypto Playbook
GameStop (GME) stock jumped nearly 13% in premarket trading on Wednesday after the company announced plans to allocate part of its cash holdings to bitcoin (BTC-USD). The board unanimously approved an update to its investment policy, adding Bitcoin as a treasury reserve asset, according to a press release on Tuesday.
The move comes amid growing speculation about GameStop’s interest in cryptocurrency. Last month, CNBC reported that the video game retailer was exploring crypto investments. Fueling the rumors, GameStop CEO Ryan Cohen posted a picture with MicroStrategy (MSTR) CEO Michael Saylor on X, sparking discussions about potential similarities between the two companies. MicroStrategy, known for its aggressive Bitcoin accumulation, now holds over 447,000 tokens, according to February filings.
Saylor’s Bitcoin-focused strategy has been lucrative for MicroStrategy, with its stock soaring over 84% in the past year alongside Bitcoin’s price rally. However, Wall Street analysts remain skeptical about GameStop’s decision to follow suit.
Wedbush analyst Michael Pachter expressed doubts about the move, stating, “The company’s strategy, which has changed about six times in three years, is they’re going to buy cryptocurrency and be just like MicroStrategy.” He warned that even if GameStop invested its entire $4.6 billion cash reserve into Bitcoin, it wouldn’t necessarily translate into stock gains, predicting that the stock price could drop by $5 under such a scenario.
The announcement coincided with GameStop’s fourth-quarter earnings report. The company posted $1.28 billion in net sales, a 28% decline from the previous year, and reported an adjusted full-year EBITDA of $36.1 million, down from $64.7 million.
While investors initially cheered the Bitcoin news, the long-term impact on GameStop’s stock remains uncertain.
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