GameStop (GME) stock surged 20% in after-hours trading after a report the company is considering investing in Bitcoin (BTC). According to CNBC, it looks like GameStop would evaluate this as to whether it could put money into Bitcoin and the other cryptos through its corporate policy as an option for its balance sheet.
GameStop shares went up to $31.30 from $26.30 in regular trading. Prices settled around $28.36, up 7% and clearly showing investor demand. A Solana memecoin related to GameStop (not backed by the company) went up to $0.0027 before dropping back to $0.0025 according to CoinGecko.
GameStop CEO Meets Bitcoin Investor Michael Saylor
According to reports; whispers on a possible GameStop Bitcoin investment; Ryan Cohen, CEO of GameStop, just met with Michael Saylor, founder and Executive Chairman of Strategy (formerly MicroStrategy)-the largest corporate holder of Bitcoin with over 400,000 BTC.
Cohen posted a picture of the meeting on Feb 8, sparking speculation that GameStop would follow a Strategy-like investment model for Bitcoin. But CNBC clarified that Saylor is not involved in GameStop’s discussions on investing in BTC.
It makes sense for GameStop to do so given the company’s financial situation, which, as of Q3 2024, has around $4.616 billion in cash reserves and total liabilities of less than $1.5 billion. If GameStop decides to keep a portion of its reserves in Bitcoin, it would become one of the largest corporate holders of digital assets.
GameStop’s History with Crypto & NFT
GameStop isn’t new to crypto, either. In May 2022 they launched a crypto wallet where users could store and trade virtual assets. Sources say they shut down the wallet in 2023 due to regulatory uncertainty.
They also dabbled in NFTs with their NFT marketplace opening on October 31, 2022. This NFT marketplace for gaming assets was through a partnership with ImmutableX, an Ethereum Layer 2 blockchain solution.
After a hot start; GameStop allegedly left the NFT space in January 2024 due to lack of volume in the sector.
What Lies Ahead for GameStop and Bitcoin?
Investing in the currency could provide GameStop with hedges against inflation as well as some defensive diversifications of its assets.It shouldn’t be thought otherwise, though. The company has yet to make any formal announcement regarding its investment in Bitcoin.
Analysts in the industry agree that if even GameStop pursues the plan, it will likely take the same path as Tesla and MicroStrategy have taken with respect to Bitcoin inclusion in their corporate coffers.
Conclusion
The speculation of GameStop’s potential Bitcoin investment creates a buzz in the market, especially given its healthy financial state and the recent encounter of its CEO, Ryan Cohen, with Michael Saylor.
Should the company make such a move, it would mark a historical moment in American corporate adoption of Bitcoin. Investors will keep a close eye on GameStop’s next moves as the prospect of digital asset exposure is weighed.
Stay updated with Deythere as we’re available around the clock, providing you with updated information about the state of the crypto world.
FAQ
1. Why did GameStop stock jump 20% in after-hours trading?
GameStop shares shot up when it was reported that the company is all set to invest in Bitcoin. Also drove the interest in investors when news of a meeting between CEO Ryan Cohen and Bitcoin advocate Michael Saylor surfaced.
2. Is GameStop officially investing in Bitcoin?
GameStop is still evaluating and hasn’t made an official announcement. The reports suggest that they are seriously considering Bitcoin to be on their balance sheet.
3. What happened to GameStop’s crypto wallet?
In 2022, GameStop launched a crypto wallet but discontinued it in 2023 due to regulatory uncertainty.
4. How does Bitcoin investment affect GameStop?
GameStop makes the company more resilient financially by investing in Bitcoin, much like MicroStrategy and Tesla.
5. What is GameStop’s experience with NFTs?
GameStop opened an NFT marketplace in late 2022. It was shut down in January 2024 since interest in it was low and market problems troubled the project.
Glossary
Bitcoin (BTC): The largest and most established cryptocurrency by market capitalization, also referred to as digital gold.
After-Hours Trading: Stock trading after the close of regular market hours.
NFT (Non-Fungible Token): A digital asset that is unique and is encoded on a blockchain, usually-traditionally-to an art, collectibles, or gaming.
Layer 2 Blockchain: A complementary structure on a base blockchain to optimize scalability and reduce cost of transactions
Corporate Treasury Strategy: A treasury approach in which companies invest through some of their resources in different kinds of assets, such as Bitcoin, in order to hedge financial risks and potentially add value in the future.
References
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