GameStop Invests $513 Million in Bitcoin – BitcoinBlog.de – das Blog für Bitcoin und andere virtuelle Währungen

GameStop-Filiale in Manchester. Bild von Mike Mozart via flickr.com. Lizenz: Creative Commons

One publicly traded company after another is transforming itself into a Bitcoin treasury. Now, it’s GameStop’s turn—a not exactly controversy-free US company.

I’m honestly not sure whether this is good or bad news: GameStop has purchased 4,710 Bitcoins for $513 million. The company did not finance this acquisition from its own funds, but instead—as you might have guessed—through convertible bonds, raising a total of $1.3 billion.

The decision to accumulate Bitcoins was made in March at a meeting to revise the company’s investment strategy. Bitcoin is to become GameStop’s primary reserve currency, and rumor has it that GameStop CEO Ryan Cohen was inspired by a meeting with MicroStrategy chief Michael Saylor.

The market reaction to this crypto investment was mixed. After the announcement, GameStop’s stock initially rose by 4.5% in pre-market trading. However, by the end of the trading day, the price had fallen by more than 10%.

This is not GameStop’s first foray into the crypto market. The company had previously launched an NFT marketplace where rare collectibles from the gaming scene were traded with some success. However, this marketplace was closed in 2024 due to regulatory uncertainties. Even earlier, GameStop worked on blockchain-based games and explored the possibility of issuing NFT-based dividends, but these plans were never fully implemented.

GameStop’s original business model focused on selling physical video games. This worked well for some time, but as digital game distribution became more widespread, the company ran into a dead end and entered a deep crisis—which almost led to the company’s demise during the COVID-19 pandemic.

But in the spring of 2021, GameStop’s stock exploded from about one euro to around 60 euros. This surge had nothing to do with business performance, but was rather the result of some risk-taking retail investors coming together on social media to bet against hedge funds. This “uprising” of the small investors wrote a piece of financial history.

Since then, the stock price has maintained high volatility, ranging between 12 and 30 euros—a remarkably high value compared to 2020 levels. However, this contrasts with a shrinking core business that, if anything, only produces minor profits. With a P/E ratio (price-to-earnings) of 1,500 last year, the stock price has spectacularly decoupled from actual business results.

Given this situation, it’s hardly surprising that GameStop is now launching a “Bitcoin strategy.” After all, accumulating Bitcoins has become an established method for companies to make their stock value independent of actual business performance, and, quite often, to try to revive a languishing share price.

For GameStop, success has been rather muted. The price did indeed spike at the end of May to a high of 32 euros—but quickly dropped back to about 26 euros. The “Bitcoin treasuries”—the companies accumulating Bitcoins under a so-called “Bitcoin strategy” to boost their stock price—are slowly starting to resemble shitcoins: what works once and attracts capital, will work n times—only until it doesn’t anymore. Every trend is exploited until it yields nothing further.