GameStop's Stock Jumps 16% After Bitcoin Purchase Announcement

GameStop's stock surged by 16% on Wednesday following the company's announcement that it would begin purchasing bitcoin to bolster its balance sheet. This move comes after the gaming retailer reported holding $4.8 billion in cash during its fourth-quarter earnings on Tuesday. CEO Ryan Cohen had previously hinted at the possibility of acquiring bitcoin for the company's balance sheet, and this was further supported by Matt Cole, CEO of Strive Asset Management, who also advocated for the same.

The company's plan to allocate a portion of its cash into bitcoin and U.S. dollar-dominated stablecoins sparked a wave of speculation on social media. The exact amount and timing of these purchases remain undisclosed, but the move has generated significant interest and discussion among investors and enthusiasts.

According to Anthony Pompliano, founder and CEO of Professional Capital Management, GameStop's decision to undergo a bureaucratic board approval process suggests that the allocation to bitcoin will be substantial. Pompliano noted that Cohen's behavior, including following bitcoin-related accounts on X, indicates a strong commitment to the cryptocurrency. This sentiment was echoed by Michael Saylor, whose company Strategy has acquired over 500,000 BTC. Saylor's followers believe that GameStop should hold at least $3 billion worth of bitcoin to gain respect within the bitcoin community.

While the exact strategy and aggressiveness of GameStop's bitcoin purchases remain unclear, the company has employed various creative fundraising mechanisms, including debt sales, to build its financial reserves. In contrast, Strategy's initial bitcoin acquisition started with a more modest cash reserve generated by COVID-era cost savings. The impact of bitcoin price fluctuations on GameStop's share price is also a topic of interest, with some analysts suggesting that the company's stock may be resilient to such swings given its current lack of bitcoin holdings.