Stock of GameStop under scrutiny following Bitcoin purchase of 4,710 units
GameStop Bolsters Crypto Tie-In, Purchases Over half a Billion Dollars in Bitcoin
In a move to further cement its place in the crypto market, GameStop announced on Wednesday, May 28, its acquisition of 4,710 Bitcoin, valued at around $519 million. With each Bitcoin costing roughly $109,728 at the time, the video game retailer's shares saw a 3% rise ahead of Thursday's market opening.
The announcement comes after GameStop completed a $1.5 billion convertible senior notes offering in April. The move aimed to capitalize on GameStop's memecoin status to invest in Bitcoin and boost investor appeal.
This is not the first time GameStop has dabbled in Bitcoin. Back in March, the company approved a plan to convert a portion of its $4.77 billion cash reserves into Bitcoin, although the exact amount was not disclosed.
As GameStop aims to revive its ailing business, some view the latest Bitcoin investment as an attempt to mimic Michael Saylor's strategy. In February, GameStop CEO Ryan Cohen posted a photo with Saylor, which many traders saw as a sign of the company's impending Bitcoin shift.
While the strategy appears to be working, with GameStop's stock rising 5.99% to $35 per share following the latest Bitcoin purchase, its long-term success remains questionable. Cryptocurrency's volatility, concerns over financial benefits, and the company's ongoing struggles present challenges for GameStop.
Other companies are following suit, issuing significant funds to invest in Bitcoin. For example, Japanese Metaplanet recently issued $50 million in bonds to expand its Bitcoin holdings, while Donald Trump's Trump Media & Technology Group plans to acquire $2.5 billion in Bitcoin.
Despite the growing crypto trend, GameStop's Bitcoin investment has yet to spark a significant, lasting positive impact on its stock price. The move is part of GameStop's broader strategy to adapt to the changing retail landscape and boost profitability in the face of declining physical video game sales. However, the company still faces challenges such as store closures, urging caution among investors regarding GameStop's future prospects.
- GameStop seems to be expanding its cryptocurrency involvement, as it has now announced purchasing over half a billion dollars worth of Bitcoin, joining other companies like Metaplanet and Trump Media & Technology Group in the growing trend of investing in Bitcoin.
- As GameStop aims to adapt to the changing market, it is not only investing in Bitcoin but also showing interest in decentralized finance (DeFi) by possibly considering the use of a decentralized exchange (DEX).
- Meanwhile, GameStop's shareholders may also be looking forward to potentially lucrative Initial Coin Offerings (ICOs), considering the company's ongoing collaboration with cryptocurrency and blockchain technology.
- Furthermore, the company's recent acquisition of Bitcoin has sparked discussions about the potential launch of its own utility token, allowing customers to access exclusive discounts, coupons, or other unique benefits while engaging in transactions within the GameStop ecosystem, using XRP or other popular cryptocurrencies as well.
