It’s great to see GameStop going in this direction. Its board has unanimously approved a plan to invest corporate cash in bitcoin, following MicroStrategy’s bitcoin playbook. On Thursday, that announcement sent the market into a frenzy, with investors piling back in. In response, GameStop’s stock shot up more than 6% in after-hours trading. The company’s fourth-quarter earnings report followed up with large increases in net income, propelling investor confidence even more.
The announcement confirms CNBC's earlier report in February, which hinted at GameStop's intentions to incorporate bitcoin and other cryptocurrencies into its balance sheet. Second, GameStop appears to be taking a cue from MicroStrategy’s playbook in its own bitcoin purchase. MicroStrategy has become notorious for its big buys of bitcoin. MicroStrategy's transformation from a software stock to a bitcoin holding vehicle has been notable, marking a significant shift in its corporate strategy.
After an initial spike down, GameStop’s stock dropped drastically at the news but then skyrocketed again. That upbeat financial performance has investors hopeful, as indicated by a positive market reaction easily explainable by the company’s fourth quarter financial performance. This time, GameStop’s net income was $131.3 million. This funding nearly tripled last year’s total of $63.1 million for the same quarter. This recent dramatic growth has been seen as a good thing, especially by the company’s billionaire investors.
That’s why market observers are flabbergasted by such a deeply bullish call. Except, this move is fully in line with CNBC’s own prior reporting. The ‘GameStop’ effect GameStop’s adoption of bitcoin is both a sign of a strategic shift and a symptom of a larger trend. Companies are looking for new investment opportunities. By taking a page out of MicroStrategy’s playbook, GameStop is looking to get in on some of the advantages that cryptocurrency investments can bring.