It was a picture suitable for framing.
There they were, side by side: GameStop (GME) CEO Ryan Cohen and Michael Saylor, co-founder of software company Strategy (MSTR) (formerly MicroStrategy), posing in a Feb. 8 photo posted on Cohen’s X account.
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Strategy is the largest corporate holder of bitcoin, and shares of both companies surged after the image went public on speculation that the videogame retailer might embrace crypto.
“GME like hundreds of other companies will buy bitcoin to save their company from dying on a dollar standard,” Bitcoin Mindset commented in response to the photo.
“Ohhhhh boiiiiiii,” JonnieKing said on X. “Is $GME adding $BTC to their balance sheet !?”
Funny you should ask. On March 25 GameStop reported fourth-quarter results and said it was adding the world’s largest cryptocurrency to its corporate investment policy.
Of course, GameStop is the poster child for the meme-stock short squeeze phenomenon of 2021, when retail investors on forums like WallStreetBets started buying shares, causing a sudden and sharp rise in the stock’s price.
— Ryan Cohen (@ryancohen) February 8, 2025
Trader: GameStop cost cuts lifted margins
Hedge funds that had sold the company’s stock short were forced to buy back shares at much higher prices to cover their positions, and several major hedge funds sustained heavy losses.
GameStop handily beat Wall Street’s earnings expectations on March 25, posting profit of 30 cents a share, more than triple the analyst consensus figure of 8 cents. The company had reported adjusted earnings of 22 cents for the year-earlier quarter.
But GameStop missed expectations on revenue, posting $1.28 billion, a 28.5% decline year-over-year and short of analysts’ call for $1.48 billion.
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Bitcoin is down 8.4% year-to-date and up 24% from a year ago. GameStop shares closed regular March 26 trading up nearly 12% at $28.36, more than double the $13.17 close a year ago.
Stephen Guilfoyle said in his recent TheStreet Pro column that GameStop “did an excellent job of cutting back on both the cost of sales and operating expenses, which boosted margins sharply.”
GameStop closed about 1,000, or about a quarter, of its stores worldwide within the past year. It said it expected to close significantly more in coming months but hadn’t yet identified which ones.
Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said Cohen was taking a page out of Saylor’s bitcoin book.
Strategy “has been a major investor in bitcoin for years, and with its bitcoin holdings dwarfing its actual business, [it] has become known on Wall Street as something of a proxy for bitcoin itself, though there are now ETFs that get that done for investors,” the Wall Street veteran said.
Analysts: we were wrong about GameStop
Guilfoyle said GameStop had “one of the strongest balance sheets you will ever find in corporate America.”
“Talk about a turnaround story based upon fiscal discipline despite a core business that remains in decline,” he said. “This management team has done an outstanding job.”
Guilfoyle said he was not investing in GameStop right now but noted that it was hard not to invest in growing cash flows and strong balance sheets.
“Who doesn’t love fiscal discipline, especially when it works?” he asked. “This firm does have those things going for it.”
Wedbush analysts kept their underpeform rating on GameStop, while boosting their stock price target to $11.50 from $10.
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“We admire management’s resolve to run the business efficiently, and based upon the results for the quarter, are more confident than we have been in the past that GameStop can achieve breakeven results for the foreseeable future,” the investment firm said in a research note entitled “Saving Its Way to Prosperity.”
Wedbush said GameStop’s presumed intention to invest in bitcoin “could impact its interest income, but for the time being we are going to assume that GameStop can continue to generate $220 million in interest income for the foreseeable future.”
“While it is arguable that the Q4 results are not sustainable, we did not expect GameStop to even approach operating breakeven ever again,” the firm said. “We were wrong, and it is clear that the company’s operations have some value, albeit not as great as its share price suggests.”
“We will revisit our price target and investment thesis should GameStop again prove us wrong and return to operating profitability,” Wedbush said.
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