GameStop Explores Bitcoin Acquisition

Shares of GameStop (GME) traded 16% higher on Wednesday after the company announced plans to buy Bitcoin (BTC) for its balance sheet.

The gaming retailer reported holding $4.8 billion in cash during its fourth-quarter earnings on Tuesday. Company CEO Ryan Cohen previously hinted at an interest in purchasing Bitcoin. Joined by Matt Cole, CEO of Strive Asset Management, who is also a GME ETF owner, they expressed similar enthusiasm.

Although GameStop indicated that part of its cash would be allocated to Bitcoin and U.S. dollar-dominated stablecoins in the future, it did not specify the amount or timing of purchases.

This announcement sparked a speculative frenzy on social media regarding how much Bitcoin GameStop would acquire.

Anthony Pompliano, founder and CEO of Professional Capital Management, suggested that GameStop’s allocation will likely be substantial. He noted that the bureaucratic process required for such decisions implies a significant investment rather than a small allocation of 1-2% of its cash into Bitcoin.

Pompliano stated, “Chairman Ryan Cohen is likely to take a big bet on Bitcoin as a balance sheet asset.” He also noted that Cohen follows three Bitcoin-related accounts on X, indicating a strong interest in the cryptocurrency.

A poll by Michael Saylor, CEO of MicroStrategy (MSTR), found that many of his followers believe GameStop needs to hold at least $3 billion in Bitcoin to gain respect from the Bitcoin community.

It’s uncertain if GameStop will adopt as aggressive a purchasing strategy as MicroStrategy. The company has employed various fundraising mechanisms, including debt sales, to bolster its finances. In contrast, MicroStrategy’s Bitcoin accumulation story began with a modest cash reserve of $250 million from COVID-era savings.

The surge in GameStop’s shares may withstand Bitcoin price fluctuations since the company has yet to purchase BTC, as noted by former bond trader Josh Mandell. He acknowledged the confusing situation on social media, stating, “I will not ask anyone to make it make sense.”