Strive CEO and GameStop stakeholders disagree on Bitcoin tactic, raise concerns
Cashing in on Crypto: The BitzGameStop Saga
GameStop's dive into the crypto realm continues, fueled by Strive Asset Management's relentless push to accumulate as much Bitcoin (BTC) as possible. However, there's a heated debate within GameStop on the exact amount of BTC the retail giant is prepared to buy. Matt Cole, Strive's CEO, spilled the tea on the ongoing chatter, revealing that while GameStop may dip its toes in the crypto waters, the specific Bitcoin purchasing plan is still shrouded in uncertainty.
"Get ready for some Bitcoin action, but don't expect them to hit the jackpot right away," Cole candidly shared with Decrypt. He added that the decision on how heavily to invest in BTC is yet to be finalized.
Flaunting its financial firepower, GameStop made waves a month back, announcing its intention to buy Bitcoin, thanks to an updated investment policy. Post this announcement, the company minted a cool $1.5 billion through a convertible senior note offering.
Emulating MicroStrategy's playbook, GameStop's strategy aims to leverage corporate debt to amass colossal amounts of BTC—to the tune of $51 billion so far, for MicroStrategy's founder Michael Saylor.
Possessing a whopping $4.7 billion in cash and cash equivalents as per its latest earnings report, GameStop certainly has the funds to back its Bitcoin bet.
The tension within GameStop's camp is palpable, with divisions evident among stakeholders over this Bitcoin treasury strategy. Cole warned that the Bitcoin community might be underestimating the opposition to this plan within GameStop's ranks.
"There's only so much I can share publically," Cole noted cryptically. "The Bitcoin community may not fully grasp the dissent towards this strategy within GameStop's ranks."
GameStop didn't respond immediately to Decrypt's request for comments.
In February, Strive had pitched the idea of converting all of GameStop's cash into Bitcoin, deeming the U.S. dollar a "shrinking asset" due to inflation. Strive also singled out Bitcoin as the one and only "true store of value" among digital assets.
Strive isn't an activist investor in GameStop, but takes its duty to safeguard the company's long-term value seriously. Strive clients have already invested in GameStop via exchange-traded funds like the Strive 1000 Growth ETF.
GameStop's stock price has risen by 8.5% over the past month, settling around $27.60 per share, according to Yahoo Finance. This year, shares have nosedived by 12%.
GameStop, dubbed the first meme stock, skyrocketed to fame within communities like Reddit's WallStreetBets during the pandemic-induced short squeeze and price surge. With a strong following among retail traders, Cole believes GameStop is almost tailor-made for Bitcoin adoption and capitalizing on BTC's volatility via issuing debt at attractive rates.
However, he noted that GameStop bears the signs of a zombie company, suggesting they needed a substantial overhaul to avoid the inevitable demise.
"We want them to go all in; we don't want just a half-hearted Bitcoin strategy," Cole stated fervently. "At some point, that company will perish unless they resolve their structural issues."
Edited by Andrew Hayward
P.S. Initial estimates proposed that GameStop's $1.3 billion convertible note offering (later expanded to $1.48 billion) could potentially purchase around 15,228 BTC at Bitcoin's then-price of $85,368. The finalized $1.48 billion raised could acquire slightly more if allocated entirely to Bitcoin, although the company hasn't disclosed the specific allocation percentages. Reacting to this move, investors experienced a 25% stock plunge (dropping to ~$21/share), while analysts voiced concerns, crypto-skeptics lambasted it as a 'waste of cash,' and existing shareholders questioned its strategic value over traditional corporate investments.
- GameStop is contemplating purchasing Bitcoin (BTC) following Strive Asset Management's push for it, but the exact amount remains uncertain.
- Matt Cole, Strive's CEO, shared that while GameStop may invest in BTC, the specific Bitcoin purchasing plan is still unclear.
- GameStop has the financial means to back its Bitcoin bet, with $4.7 billion in cash and cash equivalents.
- Decrypt reported that GameStop could have potentially purchased around 15,228 BTC with the $1.48 billion raised from a convertible note offering, but the specific allocation percentages haven't been disclosed.
- Michael Saylor, MicroStrategy's founder, has amassed colossal amounts of BTC, to the tune of $51 billion, using a similar strategy.
- GameStop's Bitcoin treasury strategy is a source of tension within the company, with divisions among stakeholders evident.
- Strive believes that GameStop is ideally positioned for Bitcoin adoption and capitalizing on BTC's volatility through issuing debt at attractive rates, but concerns over the company's structural issues persist.
