Shares of GameStop (GME) traded 16% higher on Wednesday after the company announced that it would start buying bitcoin (BTC) to add to its balance sheet.
The gaming retailer reported holding $4.8 billion in cash during its fourth-quarter earnings on Tuesday. Company CEO Ryan Cohen weeks ago had teased an interest in purchasing bitcoin for the GME balance sheet. He was joined by Matt Cole, CEO of Strive Asset Management — an owner of GME via its ETFs, who urged the same.
Though GameStop on Tuesday reported that a portion of its cash will go into bitcoin and U.S. dollar dominated stablecoins in the future, it did not disclose how much, or the timing of any buys.
The plan kicked off a speculative frenzy on social media: How much bitcoin would Gamestop acquire?
The company’s allocation will likely be significant, according to Anthony Pompliano, founder and CEO of Professional Capital Management, who said that GameStop wouldn’t be going through the very bureaucratic board approval process if it was only planning on allocating 1-2% of its cash into bitcoin.
“Chairman Ryan Cohen is likely to take a big bet on bitcoin as a balance sheet asset,” Pompliano wrote in a note. “You only put the time and energy to get the change to your investment policy if you are looking to put a material amount of your cash into bitcoin.”
Pomp also pointed out that Cohen currently follows three bitcoin-related accounts on X, which he sees as “behavior of a hardcore bitcoiner.”
According to a poll posted by Michael Saylor — whose Strategy (MSTR) has spent $33 billion acquiring more than 500,000 BTC — on X, his followers believe that GameStop needs to at least hold $3 billion worth of bitcoin in order to “be respected by Bitcoiners.”
Less clear is whether GameStop plans to be as aggressive inn buying bitcoin as Strategy. The company has deployed many creative fundraise mechanisms to fuel its war chest, including debt sales. But Strategy’s BTC saga started as a more humble cash reserve of $250 million generated by COVID-era cost savings.
Gamestop’s share boost may prove resilient to bitcoin price swings because the company has only said it would buy BTC, but doesn’t yet own any, mused Josh Mandell, a former bond trader. He called out the perplexing situation on social media.
“I will not ask anyone to make it make sense,” he said.