GameStop Stock Surges Over 8% In Friday Pre-Market: What's Going On?

GameStop Corp. GME, the renowned video game retailer is trading 8.6% higher in Friday pre-market amid reports of investments in bitcoin and other cryptocurrencies.

What Happened: GameStop is exploring the possibility of diversifying its investments into alternative asset classes, such as cryptocurrencies, with a particular focus on bitcoin BTC/USD, indicated a CNBC report. This news triggered a surge in GameStop’s shares, which skyrocketed by up to 20% in extended trading.

However, the company may decide against proceeding with these investments as it is still assessing whether such a move aligns with its business strategy, as revealed by an insider.

It’s noteworthy that GameStop had previously launched crypto wallets in 2022, enabling users to handle their crypto and nonfungible tokens. However, this service was discontinued in 2023 due to “regulatory uncertainty,”

Under the leadership of CEO Ryan Cohen, GameStop has been focusing on cost-cutting and optimizing operations to maintain profitability, even without growth. According to a securities filing in December, the company had a cash reserve of $4.6 billion as of Nov 2, which it has been leveraging for investments.

SEE ALSO: Billionaire Peter Thiel-Backed Crypto Startup Plasma Raises $20M To Develop Bitcoin-Based Stablecoin Network

Why It Matters: GameStop’s potential move into Bitcoin and other cryptocurrencies has been a topic of speculation for years. The company had previously amended its rules on its cash balance to give CEO Cohen control over trading the company’s cash balance into stocks and cryptocurrencies.

The rumors gained momentum when Cohen posted a photo with the Co-Founder and former CEO of MicroStrategy MSTR Michael Saylor, a vocal proponent of adding Bitcoin to corporate balance sheets.

This potential move into the crypto space has been viewed by some, such as economist Peter Schiff, as a desperate attempt to gain relevance, likening it to a “Hail Mary” pass. Regardless, if GameStop does decide to proceed with this move, it would be joining a growing list of public companies diversifying into the crypto sector.

READ MORE: [Exclusive] Michael Saylor’s MSTR-Linked ETFs Are ‘Not For Long-Term Investors’ Say Crypto Experts: ‘…They Also Double The Potential Loss’

Image via Shutterstock

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.