GameStop GME shares are up some 15% on Wednesday, March 26 after the gaming merchandise retailer announced plans of using its corporate cash to buy Bitcoin BTCUSD.
In its press release, the firm did not set a limit on how much it may invest in the world’s largest cryptocurrency by market cap.
The Barchart Brief: Your FREE insider update on the biggest news stories and investing trends, delivered middayInvestors are cheering the announcement because putting BTC on the balance sheet has worked wonders for MicroStrategy MSTR stock over the past year.
Including today’s surge, GME shares are up nearly 35% versus their year-to-date low.
What a Bitcoin Strategy May Mean for GameStop Stock
MicroStrategy has transitioned from a business intelligence software company into a Bitcoin proxy in recent years. It started buying BTC in August 2020, when MSTR traded for roughly $15.
Today, the Virginia-headquartered firm owns more than 500,000 BTC in total, while its share price sits at about $33. That’s a well over twenty-fold increase in less than five years.
In 2024, the company now known as Strategy achieved a “BTC Yield” of 74.3%, indicating its Bitcoin acquisition strategy has been immensely successful in improving shareholder value.
So, if GME succeeds in replicating MicroStrategy with its Bitcoin strategy, it’s reasonable to believe that its stock price will rally in the medium to long term as well.
That is what’s driving GameStop stock price up at the time of writing.
GME More Than Doubled Net Income in its Q4
GameStop shares may be worth buying at current levels because the retailer’s earnings release also showed signed of improvement on Wednesday.
For its Q4, the gaming merchandise company reported about $131 million in net income. That translates to a more than 100% growth from $63.1 million in the same quarter last year.
More importantly, the NYSE-listed firm has sharply improved its overall liquidity in the trailing 12 months, from $1.19 billion only to $4.775 billion.
Wall Street Remains Bearish on GameStop Shares
While things seem to be picking up for GameStop, investors should note that Wall Street remains bearish as ever on GME shares.
The consensus rating on GameStop currently sits at “Strong Sell” with the mean target of $10 indicating potential downside of about 65% from current levels. However, investors should note that Barchart is only tracking one analyst in coverage of GME.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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