GameStop’s board approved adding Bitcoin as a treasury reserve asset, increasing cash reserves to nearly $4.8 billion. This strategic move saw GME stock rise over 12% post-announcement. GameStop reported Q4 net income of $131.3 million, though it experienced a 28% decline in net sales. Analysts remain critical of the Bitcoin investment strategy.

GameStop’s board of directors has unanimously approved a plan to include Bitcoin as a corporate treasury reserve asset, following speculation earlier this year. As of February 1, 2025, the company held nearly $4.8 billion in cash and equivalents, which signifies a substantial increase from the previous year’s $921 million. The decision allows GameStop to allocate these reserves towards acquiring Bitcoin and U.S. dollar-denominated stablecoins.

In an SEC filing, GameStop remarked that it has not established a cap on the amount of Bitcoin it may acquire, adding that it may also sell any Bitcoin purchased. This strategy mirrors that of Strategy, formerly MicroStrategy, which holds significant Bitcoin assets. Responding to this latest development, GameStop’s stock price surged over 12% in pre-market trading, following a 0.82% decline to $25.40 on Tuesday.

GameStop CEO Ryan Cohen’s efforts to rejuvenate the company’s traditional retail model include cost-cutting and streamlined operations. The Bitcoin investment signifies a new direction for the company, especially after a prior attempt to delve into digital assets under former CEO Matt Furlong failed. The fourth-quarter financial report revealed a net income of $131.3 million, surpassing last year’s $63.1 million, yet net sales saw a 28% decline year-on-year to $1.28 billion.

Despite strong earnings, some analysts express skepticism regarding the Bitcoin strategy. For instance, Wedbush analyst Michael Pachter highlighted potential concerns about the stock value in relation to Bitcoin holdings.

With GameStop continuing to increase its cash reserves, the company seems well-equipped to pursue this cryptocurrency approach, while maintaining its core retail operations.

In summary, GameStop is taking a progressive step into the cryptocurrency realm by approving Bitcoin as a treasury reserve asset, supported by its robust financial position. Despite the positive earnings and substantial cash reserves, analysts question the long-term implications of this strategy. Nevertheless, GameStop’s approach under CEO Ryan Cohen represents a notable shift aiming to revitalize its business model in a changing market.

Original Source: coincentral.com

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