"Strategy not tested": GameStop wants to invest cash reserves in Bitcoin
With 500,000 Bitcoin purchased, MicroStrategy holds more than any other company. Now the video game retailer GameStop also wants to get on board in a big way.
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The US video game retailer GameStop has announced its intention to buy Bitcoin with company money and that there is no upper limit. This was decided unanimously by the Board of Directors, the company informed the US Securities and Exchange Commission (SEC). At the beginning of February, the company had cash reserves of almost 4.8 billion US dollars. Theoretically, the assets could be fully invested in cryptocurrency. GameStop acknowledges to the SEC that the price of Bitcoin is subject to strong fluctuations: "Our Bitcoin strategy has not been tested and may prove unsuccessful." Further risks are then listed, such as attacks on the company's own wallets.
Set an example by MicroStrategy
By turning to Bitcoin, GameStop is following in the footsteps of the software company MicroStrategy, which now operates as Strategy, including the Bitcoin logo in its name. The company has been buying Bitcoin on and off since summer 2020 and now owns more than 500,000 of them. At the current price, MicroStrategy's reserves are therefore worth around 45 billion US dollars. No other company holds more Bitcoin, writes the financial magazine CNBC. MicroStrategy's share price has almost tripled since the start of the Bitcoin purchases, with an increase of 10 percent this year. At GameStop, the decision in favor of the cryptocurrency has now caused the share price to rise by almost 20 percent, but the company is already used to big jumps.
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CNBC now describes the Bitcoin purchases as the latest attempt by GameStop CEO Ryan Cohen to revive the retailer's ailing business. It was only at the turn of the year that GameStop closed all its stores in Germany. Alongside the announcement of the new strategy, GameStop also revealed that it made a profit of 131 million US dollars in the latest quarter, more than twice as much as in the same period last year. GameStop hit the headlines at the beginning of 2021 when its share price staged a breathtaking rally, driven by small investors organized on the internet. This resulted in huge losses for hedge funds that had bet on a fall in the share price.
(mho)
