GameStop Buys $500 Million in Bitcoin as Inflation Hedge

GameStop CEO Ryan Cohen clarified the company's recent Bitcoin purchase, stating that it was intended as a hedge against macroeconomic uncertainty rather than a strategic investment. Cohen made these remarks during a July 15 appearance on CNBC, emphasizing that GameStop's approach differs from that of other corporate treasury strategies, such as those employed by Strategy.

Cohen views Bitcoin as a safeguard against inflation and global money printing, acknowledging the uncertain future of this investment. GameStop acquired 4,710 bitcoins in late May, valued at over $500 million. This purchase came after several other firms, including Strategy, had accumulated billions of dollars in Bitcoin. Cohen stressed that GameStop's move was independent and not influenced by these other corporate actions.

GameStop's financial position is robust, with over $9 billion in cash and marketable securities. Cohen assured that the company will deploy its capital responsibly, seeking opportunities with limited downside and significant upside. This cautious approach is part of Cohen's broader strategy to stabilize GameStop's operations, which have shifted towards trading cards and collectibles, moving away from a reliance on hardware and software.

GameStop recently raised $2.25 billion through an upsized convertible note offering. These zero-coupon notes have a conversion price of approximately $28.91 per share, reflecting a 32.5% premium over the stock’s average trading price at the time of the announcement. This offering follows a similar $1.5 billion raise in April and comes amid ongoing volatility in the company’s stock.

While some public companies are exploring Bitcoin as a reserve asset, the levels of exposure vary significantly. Strategy has taken an aggressive approach, while others, including Tesla and Block, have kept their holdings limited. GameStop's approach reflects a more cautious and strategic use of Bitcoin as a hedge rather than a core investment strategy.