GameStop shares jumped as much as 12% after the video game retailer announced its board had unanimously approved an update to its investment policy to add Bitcoin as a treasury reserve asset. The move comes alongside disappointing fourth-quarter results, with net sales tumbling 28% year-over-year to $1.28 billion.
The company is joining a growing list of public corporations experimenting with using corporate cash to invest in the digital asset, following in the footsteps of Michael Saylor's Strategy (formerly MicroStrategy), which has acquired more than $40 billion in Bitcoin and seen its share price soar by over 2,600% since 2020.
GameStop CEO Ryan Cohen had previously hinted at this strategy last month when he posted a picture of himself with Saylor on social media platform X. The company did not specify a maximum amount of Bitcoin it plans to accumulate and noted it may sell any Bitcoin it acquires, according to its 10-K SEC filing.
Despite the crypto enthusiasm, GameStop's core business continues to struggle:
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Hardware and accessories sales: $725.8 million, down 34% year-over-year
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Software sales: $286.2 million, down 38% year-over-year
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Collectibles sales: $270.6 million, up 16% year-over-year
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Net income: $131.3 million, up from $63.1 million in the prior year's quarter
The company reported earnings of 30 cents per share, beating analyst expectations of 8 cents, while ending the quarter with approximately $4.78 billion in cash, cash equivalents, and marketable securities.
GameStop has completed the divestiture of its Italy operations and wound down store operations in Germany as part of ongoing restructuring efforts. The stock remains down about 19% year-to-date despite today's surge.
The Bitcoin announcement comes amid broader cryptocurrency market strength, with Bitcoin trading around $88,000 early Wednesday, up nearly 5% over the past week.
GameStop (D1 Interval)
The stock price is approaching the 61.8% Fibonacci retracement level after opening with an 11% gap up. Support may be found near the 50% Fibonacci retracement level. The RSI is nearing the overbought zone, showing bullish divergence with higher lows, while the MACD is widening with bullish divergence.
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