GameStop Stock Tumbles as Its Bitcoin Treasury Takes a Hit
GameStop's share price is feeling the heat from a familiar crypto chill.
The Legacy Play Meets Digital Gold
Remember when the meme-stock king dipped its toes into Bitcoin? That strategic treasury move is now casting a long shadow. As Bitcoin's price swings, so does the value of GameStop's digital asset reserve—and Wall Street isn't ignoring the correlation. It's a stark reminder that on the modern balance sheet, crypto volatility isn't just a tech-page footnote; it's a direct line to the stock ticker.
Portfolio Pressure in Plain Sight
No complex derivatives or hidden swaps here. The connection is brutally simple: the company holds Bitcoin, Bitcoin's price drops, and the market reappraises the company's book value. It's a real-time case study in how digital asset exposure translates into traditional equity pressure. Forget whispers in analyst notes—this is the data, playing out live for every trader to see.
A New Rule for the Corporate Playbook
GameStop's situation highlights a new fundamental for corporate finance officers. Managing a crypto treasury requires a different playbook than handling cash or bonds. The asset's legendary volatility can amplify earnings calls and shake investor confidence faster than any quarterly sales miss. It turns the CFO into a de facto crypto portfolio manager, whether they signed up for it or not.
So, while crypto purists preach 'HODL,' public company executives are learning that the market's patience for paper losses has its limits—proving once again that in finance, bold innovation is celebrated right up until the portfolio statement arrives.
Bitcoin investment performance rags GME stock down
When GameStop purchased $512 million worth of Bitcoin in May, its stock was valued at $35, its highest year-to-date price level. It has declined gradually by roughly 30% since then, dropping from $33 to $23.35 ahead of the earnings call.
The third-quarter report revealed the Bitcoin treasury had decreased in value by almost $10 million over three months, although the firm recorded $19.4 million above its initial investment. The company confirmed that it had not bought or sold any Bitcoin during the quarter.
The decline in valuation came on the heels of a 21% drop in Bitcoin from $115,500 to $90,131 in the 90 days according to CoinGecko. The fall was partly caused by the October 10 “max pain” liquidation event in crypto history, which saw $19 billion in positions liquidated in a single day, per data from CoinGlass. Several analysts reduced Bitcoin price targets after the sell off, and it appears the largest coin by market cap is yet to shake off the bearish cloud surrounding near the anticipated “Santa Claus rally.”
Shares of GameStop fell 5.8% on Wednesday, as its Q3 report showed net sales for the period came in at $821 million, down from $860 million a year earlier and below analyst estimates of $987.3 million, a 4.6% year-on-year decline and a 16.8% miss compared with forecasts.
Despite the weaker revenue, the video game company’s net income soared to $77.1 million, up from $17.4 million in the same quarter last year. Adjusted earnings per share were $0.24, exceeding analyst expectations of $0.20, a 20% beat, and EBITDA reached $64.4 million, a remarkable 675% growth from the prior year.
Operating margin improved to 5% from a negative 2.9%, while free cash FLOW margin rose to 13%, compared with 2.3% a year earlier. The company’s market capitalization currently stands at $10.46 billion.
Corporate Bitcoin treasuries suffer from crypto winter chills
GameStop was not the only Bitcoin treasury that suffered steep losses when Bitcoin tanked from its “Uptober” highs, as many of them are now reporting substantial unrealized losses.
Companies that raised capital to acquire Bitcoin over $100,000 hoping the asset would stay above six figures and even grow exponentially in December, are now facing losses and declining equity premiums.
Metaplanet, the second largest publicly listed Bitcoin treasury company, swung from over $600 million in unrealized gains in early October to around $530 million in unrealized losses as of Dec. 1, according to Galaxy Research.
However, BTC’s rebound from the $82,000 bottom in late November helped Metaplanet’s mNAV ratio to climb to 1.17, its highest level since the October 10 crisis, according to the company’s dashboard. The Bitcoin DAT’s stock price was trading 10.83% down after the Japanese market’s Thursday session closed.
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