GameStop Urged to Adopt Bitcoin Standard for Financial Turnaround

GameStop, the struggling video game retailer, has been urged by Strive Asset Management to adopt the Bitcoin Standard as a means to transform its financial future. In a letter to GameStop's Chairman and CEO, Ryan Cohen, Strive's CEO, Matt Cole, outlined a strategy that involves shifting the company's cash reserves from a shrinking asset to a growth engine.

Strive Asset Management, which holds shares of GameStop through its exchange-traded funds (ETFs), sees potential for GameStop to become a premier Bitcoin treasury company in the gaming sector. With nearly $5 billion in cash on its balance sheet, GameStop is in a unique position to make this shift. Cole noted that GameStop has reduced its operating losses over the past two years and offset these deficits with interest income from cash holdings generated from equity offerings, stabilizing the company's balance sheet and positioning it for more dynamic strategic moves.

However, Cole acknowledged that GameStop's core challenge remains: brick-and-mortar retail is in decline as shifting consumer preferences favor digital downloads of games and content. To address this, Cole suggests that GameStop should make Bitcoin the hurdle rate for capital deployment. He proposes that the company should allocate the maximum portion of cash reserves to Bitcoin, which he sees as a true savings asset over the long run and a protection against inflationary pressures affecting fiat currencies.

Cole advises against allocating treasury resources to other cryptocurrencies, which he believes could dilute shareholder value and potentially impair GameStop's ability to raise future financing. To further reduce GameStop's retail footprint, Cole suggests closing additional stores, focusing on online platforms, and cutting costs until operating at a profit. He also proposes leveraging capital markets to fund additional Bitcoin purchases through at-the-market (ATM) offerings and convertible debt securities.

In the future, Cole suggests that GameStop should strategically deploy Bitcoin reserves for strategic growth initiatives and M&A opportunities in the gaming sector when the long-term expected rate of return exceeds simply holding Bitcoin. By adopting a treasury strategy centered on adopting the Bitcoin Standard, Cole believes that GameStop could move beyond "meme" sentiment, forging a stable foundation to drive sustainable shareholder value.