GameStop (GME) stock surged 7% after the company announced it had bought Bitcoin as an investment

GameStop stock surged by 7% just hours after the Bitcoin investment announcement. On March 25, the company announced that its board had agreed to buy Bitcoin as an investment.

GameStop's stock soared by 7% just hours after the company announced its decision to invest in Bitcoin. The company's board of directors has agreed to buy the cryptocurrency, according to a statement.

The videogame seller will be adding Bitcoin to its treasury reserve asset and is also updating its investment policy.

GameStop’s Bitcoin investment is a strong step towards strategic growth for the company as the cryptocurrency is on its highest rally since last November.

In a filing, GameStop said it might invest some of its cash or future debt and equity in Bitcoin without setting a limit on how much Bitcoin it could buy or sell. This news sparked recent speculation as the company is looking for new growth opportunities. The stock surged 13% to reach $28.75 in premarket trading.

After news broke of GameStop’s Bitcoin investment, the company’s stock made a large jump, and prices rose from $1.83 to $27.83 in extended trading. However, the price will still be much lower than its 52-week high of $64.83, even if the surge continues on Wednesday.

The price jump was accelerated by influential investor Kreith Gill, who showed his support for GameSpot as he appeared online for the first time in three years in May 2024.

The company faced over $1.3 billion in losses over the past three years as sales declined. However, in its latest fiscal year, GameStop made $131 million on $3.8 billion in sales.

For the fourth quarter ending on Feb. 1, GameStop reported net sales of $1.28 billion, falling short of the $1.48 billion analysts had expected. But adjusted earnings of 29 cents a share exceeded the 8 cents forecast, and net income of $131.3 million was well above the $33 million expected. Shares rose 6% in after-hours trading, after dropping 0.8% on Tuesday, to $25.80. During the day, shares hit a low of $24.99, down 2.4%, marking the largest intraday decline since March 12, according to Dow Jones Market Data.

Analysts and investors are focusing more on the company’s strategy than its earnings as GameStop faces concerns over the future of its core business. The company has been closing physical stores and diversifying beyond video games as digital gaming continues to rise.

Analysts believe that GameStop is heading toward digital gaming and cryptocurrency. In February, Cohen shared a photo on social media with Michael Saylor, co-founder and executive chairman of MicroStrategy, the largest institutional holder of Bitcoin, sparking rumors about GameStop’s potential crypto plans. Then, on March 3, GameStop announced a partnership with digital financial services company Zip Co., allowing U.S. customers to pay in installments for both online and in-store gaming purchases.

Zip U.S. CEO Joe Heck said that nearly 84% of Zip’s U.S. customers shop for gaming and accessories at GameStop. “Gaming is one of Zip’s most popular categories, making us the perfect partner to help these shoppers responsibly buy from one of the top names in the industry.”