GameStop, the iconic video game retailer, is facing a pivotal moment, and Matt Cole, CEO of Strive Asset Management, is urging the company to take a bold leap into the cryptocurrency space. In a recent letter to Ryan Cohen, GameStop’s Chairman and CEO, Cole emphasized the potential of transforming GameStop’s nearly $5 billion cash reserve into bitcoin.
The Opportunity for Transformation
On February 24, Matt Cole reached out to GameStop’s leadership, advocating for a strategic shift that could redefine the company’s future. Cole believes GameStop is uniquely positioned to become a leader in the gaming industry by adopting bitcoin as a reserve asset. He states, “We believe GameStop has an incredible opportunity to transform its financial future by becoming the premier bitcoin treasury company in the gaming sector.”
Strive Asset Management, co-founded by Vivek Ramaswamy, holds shares of GameStop through its exchange-traded funds (ETFs), creating a vested interest in the company’s success. While Cole did not disclose the specific number of shares held, he highlighted the fiduciary responsibility his firm has towards GameStop’s performance.
Exploring Alternatives in Investments
Cole’s letter arrives on the heels of reports indicating that GameStop is considering diversifying its investment portfolio, including the possibility of entering the bitcoin and cryptocurrency markets. In recent years, the company has made strides in reducing its operating losses and has managed to stabilize its balance sheet by generating interest income from cash reserves obtained through equity offerings. This groundwork positions GameStop strategically for future opportunities.
Bitcoin: The Future of Capital Deployment
In his correspondence, Cole argues that bitcoin is poised to become the new benchmark for capital deployment, suggesting that cash is yielding a negative real return. He posits that bitcoin serves as an effective hedge against inflation and monetary debasement. Cole advises GameStop to focus exclusively on bitcoin and to steer clear of other cryptocurrencies while utilizing capital markets for at-the-market (ATM) offerings and convertible debt securities.
A Trend Among Industry Leaders
Cole’s recommendations reflect a growing trend among companies like MicroStrategy, Semler Scientific, and MARA Holdings, which have successfully incorporated bitcoin into their financial strategies. Many larger-cap stocks that have ventured into bitcoin have not only seen their stock prices increase but have also created new opportunities for capital raises.
Recognizing GameStop’s Progress
The letter concludes with Cole commending GameStop for its recent strategic decisions, including the closure of unprofitable stores and the rejection of diversity, equity, and inclusion (DEI) initiatives. He acknowledges the leadership demonstrated by GameStop’s management, stating, “We applaud the leadership your firm has already taken to close many unprofitable stores and publicly reject DEI.”
In summary, Matt Cole’s appeal to GameStop highlights the potential for a transformative shift in the company’s investment strategy, advocating for bitcoin as a cornerstone of its financial future. By embracing this innovative approach, GameStop could not only enhance its market position but also align itself with the growing wave of companies leveraging cryptocurrency for sustainable growth.
