rewrite this title GameStop to invest corporate cash in bitcoin, following in footsteps of MicroStrategy

Video game retailer GameStop announced Tuesday its board has unanimously approved a plan to buy bitcoin with its corporate cash, echoing a move made famous by MicroStrategy.

The meme stock jumped more than 6% in extended trading Tuesday following the news. The announcement confirmed CNBC’s reporting in February of GameStop’s intention to add bitcoin and other cryptocurrencies to its balance sheet.

The video game retailer said a portion of its cash or future debt and equity issuances may be invested in bitcoin and U.S. dollar-denominated stablecoins. As of Feb. 1, GameStop held nearly $4.8 billion in cash. The firm also said it has not set a ceiling on the amount of bitcoin it may purchase.

GameStop will be following in the footsteps of software company MicroStrategy, now known as Strategy, which bought billions of dollars worth of bitcoin in recent years to become the largest corporate holder of the flagship cryptocurrency. That decision prompted a rapid, albeit volatile, rise for Strategy’s stock.

GameStop’s foray into cryptocurrencies marks the latest effort by CEO Ryan Cohen to revive the struggling brick-and-mortar business. Under Cohen’s leadership, GameStop has focused on cutting costs and streamlining operations to ensure the business is profitable.

The company said the move could expose it to volatility associated with cryptocurrency prices.

“Bitcoin, for example, is a highly volatile asset and has experienced significant price fluctuations over time. Our Bitcoin strategy has not been tested and may prove unsuccessful,” GameStop said in a U.S. Securities and Exchange Commission filing.

Bitcoin, the world’s largest cryptocurrency, has ridden a roller coaster since President Donald Trump won reelection. After shooting up and piercing the $100,000 milestone, bitcoin has declined about 18% from its record high to a recent price of approximately $88,000.

In tandem with the cryptocurrency announcement, investors also cheered a rise in GameStop’s fourth-quarter results. The firm reported net income of $131.3 million, more than double the $63.1 million earned in the same quarter last year.