Last week, GameStop revealed intentions to invest in Bitcoin, citing it as a “highly lucrative investment,” according to the CEO of Ari10.
The board of directors at GameStop unanimously gave the go-ahead to utilize corporate funds and future fundraising efforts to acquire crypto assets, particularly Bitcoin (BTC).
The immediate fallout? A 22% drop in GameStop’s stock price, marking its toughest day since June. Not exactly an auspicious beginning. Cue the “You Died” screen.
Following a slight rebound on Monday, the year-to-date losses now sit at 28.64%, although the stock is still 82% higher than it was this time last year. Yet, beneath the market fluctuations lies a long-term strategy that could set GameStop up for a potential rebound.
As conveyed by Mateusz Kara, CEO of Ari10, GameStop’s Bitcoin venture should not be interpreted as a fix for its core business, but rather as a strategic gamble on financial reinvention.
“GameStop has opted to invest in Bitcoin. The reasoning? It’s quite simple: the company recognizes that, in the long term, it’s a highly profitable investment,” noted the CEO. “A prime example is how Strategy is capitalizing on Bitcoin.”
The timing for GameStop isn’t ideal given Bitcoin’s recent downward trend. Nevertheless, this position offers GameStop advantageous entry points, although investors might require some persuasion.
It’s akin to purchasing the Master Sword with only one heart remaining—risky, but potentially transformative.
GameStop needs a fresh perspective
There are indeed strategic branding advantages, according to Kara. Investing in Bitcoin is “somewhat trendy now” and “may enhance GameStop’s image.” This could particularly resonate with younger investors who might see the company as a more vibrant, crypto-oriented option rather than just a traditional retailer facing an evident decline for over a decade.
Essentially, they’re aiming to evolve from Magikarp to Gyarados (thanks to my daughter for this reference!)
While GameStop’s shares may appear inexpensive, some of that stems from the typical “buy the rumor, sell the fact” dynamics. Investors jumped on the initial Bitcoin enthusiasm but quickly pulled back once the debt-funded strategy was confirmed.
Trump to the rescue?
Ambiguity surrounding Donald Trump’s shifting economic policies, especially regarding tariffs, continues to affect overall market sentiment—though Kara seems to disagree with this perspective.
“In the long run, U.S. policy may elevate Bitcoin’s worth—which will further boost GameStop’s stock price,” the CEO mentioned.
Whether this move positions GameStop as the next MicroStrategy Strategy is still uncertain. In the realm of publicly traded companies amassing Bitcoin, Strategy stands as the original, with others following suit. It’s like everyone suddenly vying to be the protagonist in a Final Fantasy game.
Unlike Strategy, GameStop is already valued at a significant premium over its cash reserves. However, with a revitalized narrative, customer loyalty, and now a bullish case for Bitcoin, the original meme stock may still have the potential to soar.
Or perhaps not. Press F to pay respects.