(Reuters) – GameStop jumped on Wednesday as the shares that were once at the center of “meme stock” trading frenzy caught investor attention again with the video game retailer making its move into cryptocurrencies.
The company’s shares rose 12% before the bell after GameStop said it would invest in bitcoin, with its primary brick-and-mortar retail business struggling to draw customers amid the prevalence of digital downloads and e-commerce.
GameStop’s update to its investment policy on Tuesday to add bitcoin as a treasury reserve asset mirrors exchange operator Strategy, formerly known as MicroStrategy.
Strategy is the largest corporate holder of bitcoin and its shares are often seen as a proxy for the digital currency given its elevated exposure.
GameStop’s change in investment strategy comes amid U.S. President Donald Trump’s increased focus on digital assets, which has boosted interest in cryptocurrencies.
“Retail operations aren’t the reason why GameStop’s shares are flying – they never are. This time it’s about the company’s move into bitcoin,” said Dan Coatsworth, investment analyst at AJ Bell.
The company’s shares could see increased volatility by being tied to the digital currency, according to Capital.com analyst Daniela Hathorn.
More than two months after hitting a six-figure all-time high, bitcoin is now trading at around $88,000, down nearly a fifth from its January peak.
GameStop’s aggressive cost cuts helped the company more than double its net income to $131.3 million in the fourth quarter.
The company, which has closed hundreds of stores in a pivot to e-commerce under CEO Ryan Cohen, reported fourth-quarter net sales that fell about 30% to $1.28 billion.
(Reporting by Arsheeya Bajwa in Bengaluru; Additional reporting by Shashwat Chauhan; Editing by Shounak Dasgupta)
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