(Bloomberg) — GameStop Corp., the struggling video-game retailer that became a favorite of retail traders during the meme stock frenzy in 2021, said its board has approved a plan to add Bitcoin as a treasury reserve asset.
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The Grapevine, Texas-based firm is joining a growing list of public companies experimenting with using corporate cash or borrowed money to buy the digital asset in a bid to capitalize on the surge in Bitcoin. The gambit was pioneered by Michael Saylor’s Strategy, the enterprise software company formally known as MicroStrategy that has acquired more than $40 billion in Bitcoin and seen its share price soar.
Last month, GameStop Chief Executive Officer Ryan Cohen teased at the idea, posting a picture of himself and Saylor on the X social media platform. Shares of GameStop rose about 6% in after hours trading. The stock is down about 19% so far this year.
A variety of companies ranging from medical tech providers to hotel developers have been inspired by the rise of Strategy. Its stock has increased over 2,600% since co-founder Saylor began investing the company’s cash into Bitcoin as a hedge against inflation in 2020. The cryptocurrency is up close to 700% during the same period.
Companies that have followed Strategy’s footsteps have seen their stock prices soar after announcing plans to buy Bitcoin. Public companies that have a significant Bitcoin holding on their balance sheet have seen inflows from investors that want to gain exposure to the asset class in the stock market while not dealing with Bitcoin directly. A number of Bitcoin mining companies such as MARA Holdings Inc. and Riot Platforms Inc. as well as crypto exchange Coinbase Global Inc. have also been proxies of Bitcoin in that market.
While GameStop has a struggling underlying business, it rose to fame when meme-stock traders piled into its shares amid the retail-trading frenzy during the pandemic, in which short-sellers of such stocks suffered a short-squeeze as retail traders sent the stock prices soaring.
GameStop made the announcement while reporting that fourth quarter revenue declined 28% to $1.28 billion from the year-ago period. Sales of hardware and accessories and of software both declined in the quarter, while collectible sales rose.
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