GameStop urged to adopt Bitcoin Standard by Strive Asset Management

Investing.com -- Strive Asset Management’s CEO, Matt Cole, has proposed to GameStop (NYSE:GME) that the company should adopt the Bitcoin Standard. In a letter to GameStop’s Chairman and CEO, Ryan Cohen, Cole outlined a strategy that he believes could transform the company’s financial future.

Strive Asset Management, which holds shares of GameStop through its exchange-traded funds (ETFs), sees potential for GameStop to become a premier Bitcoin treasury company in the gaming sector. With nearly $5 billion in cash on its balance sheet, GameStop is in a unique position to shift its reserves from a shrinking asset to a growth engine, according to Cole.

Over the past two years, GameStop has reduced its operating losses and offset these deficits with interest income from cash holdings generated from equity offerings. This has stabilized the company’s balance sheet and positioned it for more dynamic strategic moves. However, Cole notes that GameStop’s core challenge remains: brick-and-mortar retail is in decline, as shifting consumer preferences favor digital downloads of games and content.

Cole suggests that GameStop should make Bitcoin the hurdle rate for capital deployment. He proposes that the company should allocate the maximum portion of cash reserves to Bitcoin, which he sees as a true savings asset over the long run and a protection against inflationary pressures affecting fiat currencies.

In terms of focusing on Bitcoin, Cole advises against allocating treasury resources to other cryptocurrencies, which he believes could dilute shareholder value and potentially impair GameStop’s ability to raise future financing.

To further reduce GameStop’s retail footprint, Cole suggests closing additional stores, focusing on online platforms, and cutting costs until operating at a profit. He also proposes leveraging capital markets to fund additional Bitcoin purchases through at-the-market (ATM) offerings and convertible debt securities.

Finally, Cole suggests that GameStop should strategically deploy Bitcoin reserves in the future for strategic growth initiatives and M&A opportunities in the gaming sector when the long-term expected rate of return exceeds simply holding Bitcoin. By adopting a treasury strategy centered on adopting the Bitcoin Standard, Cole believes that GameStop could move beyond "meme" sentiment, forging a stable foundation to drive sustainable shareholder value.

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