GameStop Corp. is preparing to close a significant number of additional stores globally while shifting part of its cash reserves into bitcoin, marking a stark pivot for the once-dominant video game retailer. The move follows a year in which the company shuttered nearly 1,000 locations and reported a 28% year-over-year drop in fourth quarter revenue.
The company disclosed in a regulatory filing Tuesday that the "specific set of stores has not been identified for closure," but acknowledged a further "significant number" will be shut in the coming months. GameStop ended fiscal 2023 with 3,203 stores remaining-down from nearly 6,000 a decade ago.
In the past 12 months:
- 590 stores were closed in the U.S.
- 330+ locations were shut in Europe
- Nearly 50 stores were closed in Canada and Australia
The company's decision to exit more retail locations reflects continued pressure from digital distribution trends, competition from streaming and online gaming platforms, and broader shifts in consumer behavior. GameStop's struggles mirror those of other legacy retailers, including Joann, Forever 21, and Macy's, all of which have announced large-scale store closures in recent years.
As it retreats from brick-and-mortar, GameStop also announced a new investment strategy centered on bitcoin. The board "has unanimously approved an update to its investment policy to add Bitcoin as a treasury reserve asset," the company said in its filing.
A portion of the company's cash-and potentially proceeds from future debt or equity offerings-may be allocated toward digital currency holdings.
"The pivot to bitcoin is really a defense against irrelevance," Neil Saunders, managing director at GlobalData Retail, told CNN. "It's an odd thing as it's basically saying the strategy isn't retail but to act as some kind of cryptocurrency investment vehicle."
GameStop shares (ticker: GME) jumped nearly 13% in premarket trading Wednesday following the announcement. The stock rose 16% at one point, fueled in part by CEO Ryan Cohen's prior social media post featuring MicroStrategy CEO Michael Saylor, whose firm has invested heavily in bitcoin and now holds more than 447,000 tokens.
Wedbush analyst Michael Pachter expressed skepticism about GameStop's new direction. "The company's strategy, which has changed about six times in three years, is they're going to buy cryptocurrency and be just like MicroStrategy," Pachter told Yahoo Finance. "The problem with that thinking is MicroStrategy trades at about two times their bitcoin holdings. If GameStop were to buy all bitcoin with their $4.6 billion in cash and trade at two times [their bitcoin holdings,] the stock would drop five bucks."
In its quarterly earnings release Tuesday, GameStop reported:
- $1.28 billion in net sales for the fourth quarter, a 28% decline from the year prior
- Adjusted EBITDA of $36.1 million for the full year, down from $64.7 million in the previous fiscal year
