GameStop's Stock Surge
GameStop (GME) stock surged nearly 15% on Wednesday following the company's announcement to purchase Bitcoin (BTC-USD) using its cash reserves. This strategic move aims to add Bitcoin as a Treasury reserve asset.
Announcement Details
In a release on Tuesday, GameStop's board confirmed their unanimous decision to update their investment policy to include Bitcoin. This comes after reports that GameStop was exploring cryptocurrency investments, ignited by a social media post from CEO Ryan Cohen that hinted at the company’s interest in the crypto market.
Market Reactions
The announcement has drawn comparisons to MicroStrategy, a company that has heavily invested in Bitcoin. However, Wall Street analysts express caution regarding the potential impact on GameStop's stock. For example, Wedbush analyst Michael Pachter pointed out that MicroStrategy trades at about two times its Bitcoin holdings, suggesting that if GameStop were to follow suit, their stock could drop by five dollars.
Financial Results
In conjunction with the announcement, GameStop reported its fourth-quarter earnings, showing a 28% decline in net sales year-over-year, totaling $1.28 billion. Their adjusted EBITDA fell from $64.7 million to $36.1 million.
GameStop stock rose more than 6% in after-hours trading as the company approved a plan to buy Bitcoin with its cash holdings.
Source: STRF/STAR MAX/IPx
Comments
Join Our Community
Sign up to share your thoughts, engage with others, and become part of our growing community.
No comments yet
Be the first to share your thoughts and start the conversation!