- Video games retailer struggling to adapt to fast changing market
- Financial performance has suffered badly
- GameStop could join likes of Tesla and Block with crypto investments
The old MicroStrategy, now called simply Strategy (MSTR:NASDAQ) following a splashy rebrand on 5 February, has enjoyed such success over the past year that its cryptocurrency playbook was bound to gather mimics.
GameStop (GME:NYSE), the original meme stock video game retailer, is reportedly the latest, apparently thinking of throwing money at bitcoin and other cryptocurrencies as its core business struggles to stay relevant in a fast-changing gaming world.
The potential move comes as the cryptocurrency market continues to gain traction, with bitcoin reaching all-time highs of over $100,000 in recent months, currently changing hands at $97,141.
ROLLING THE DICE
GameStop has been trying to diversify its own business for a few years now, with little success. Revenues have fallen from $8.2 billion in 2019 to $5.2 billion last year (to March 2024), and they’re predicted to fall sharply again this year, with consensus pitched at $4 billion of sales.
Profits have vanished in that time.
Adapting to the new landscape by investing in e-commerce and digital content, as well as exploring new business opportunities in areas such as esports and gaming hardware, are clearly not enough.
CORPORATES BUYING BITCOIN
If GameStop does decide to invest in crypto, it would be joining a growing list of companies that have recognised the potential. Major companies including Tesla (TSLA:NASDAQ) and payments platform Block (XYZ:NYSE) have made significant investments in bitcoin, citing its potential as a store of value and a hedge against inflation, while Michael Saylor’s Strategy has become the largest corporate bitcoin hoarder in the world, with a haul of 478,740 bitcoin worth an estimated $46.5 billion.
But crypto investing carries significant risk, including volatility and regulatory uncertainty. GameStop’s limited 5%-odd rise this week in response to the breaking story, suggests investors remain wary.
