VRA Investment Alert: GameStop Deep Dive; Morphing Into Something Altogether Different.
/Good Tuesday morning. Hoping everyone had a good Memorial Day Weekend, as we remembered the 1 million American heros that gave everything for the country they loved.
GameStop Deep Dive; Morphing Into Something Altogether Different
GameStop (GME) has been a VRA Portfolio holding since June 2024 with a cost basis of $25.58 (last: $33.03). In our view, CEO Ryan Cohen and team are 2-3 announcements away from making GameStop almost unrecognizable from the company it is today. Of special interest, GME sits on a total of $6.3 billion in cash, a stunning 42% of the total market cap, which now sits at $14.8 billion. Short interest remains high as well with 11.9% of the float sold short (many believe that widespread illegal short selling in GME could make this total much higher).
Rating: Buy
Last: $33.03
Price Target: $50 (2025)
>$100 (2026) on successful MSTR-like Bitcoin acquisition strategy.
Our GME History
As a FinPub (founded in 2003), we have some experience in “meme” stocks. In recent years we booked >400% profits in AMC (equity and options) and 100% profits in Trump Media (DJT) (equity only). The difference between our positions in AMC and DJT to GME? We bought our positions in AMC and DJT as trades while we have continued to add to our GME equity position over the last year as a VRA Focus Stock, pending Cohens strategic moves. We also have an investment strategy in place for trading GME calls (Parabolic Options Program). We are currently long the GME 6/20/25 $30 calls.
We’ve also been long-term believers in Bitcoin, as we first purchased/recommended BTC at $2000. Since 2017 we have booked combined profits in BTC of 2,280% (two trades).
The combination of Cohens understanding of financial engineering (through timely equity/debt offerings), Cohens move into Bitcoin (likely with an MSTR-like strategy) and what we expect will be additional companies added under the GME umbrella, as long-term investors Cohen has the potential to make this an investment that we may never sell.
One caveat. As you read this, a question; "when will GME announce their first BTC purchases?” Over the last week GME has been trading like that news may be nearing (possibly into June earnings, 6/6 has been estimated although this date has not been verified by the company). In our view, it’s past time to start putting their combined $6.3 billion in cash to work.
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GME Deep Dive
Cohen keeps one of the lowest profiles of any public company CEO, however the takeaway from his rare interviews is that he may want to transform GameStop into a Berkshire Hathaway-like conglomerate (as a value investor he is inspired by Warren Buffett) and involves diversifying the GME portfolio through strategic investments, with a recent pivot toward Bitcoin and (potentially) a similar BTC investing approach that Michael Saylor's Strategy (MSTR) employs.
Cohen has mentioned Warren Buffett by name several times. He’s called Buffett "one of the biggest influences on his professional life" (alongside his father). Cohen’s talked about learning independent thinking from Buffett and he’s also been compared to Buffett for his investment moves, like at GameStop, where he may be trying a Berkshire Hathaway-style approach.
In short, it’s believed that Cohen will continue to use GME equity and debt offerings to acquire new equity positions in undervalued companies as well as long-term stacking of BTC. In our opinion it’s a clever long term investment strategy that will transform GME into an even more valuable company ($14.8 billion market cap today).
Cohen has provided limited direct statements about his plans for the company's $6.3 billion cash pile, but insights from recent actions, filings, and public sentiment offer some clues. Here’s a summary based on available information:
Bitcoin and Cryptocurrency Investments
GameStop’s board approved a plan in late March 2025 to invest part of its cash reserves in Bitcoin as a treasury reserve asset. This followed a $1.5 billion capital raise through convertible notes, primarily to fund Bitcoin acquisitions.
Speculation intensified after Cohen posted a photo with Bitcoin legend Michael Saylor (February 2025) of $MSTR, suggesting potential diversification into cryptocurrencies. CNBC has reported that GameStop is exploring alternative asset classes, with Bitcoin as a key focus.
2. Strategic Investments in Equities
In December 2023, GameStop’s board updated its investment policy to allow Cohen to invest company cash in equities, moving beyond safer assets like Treasury bonds. This move gave Cohen authority to deploy funds in public and private markets, similar to Warren Buffett’s approach at Berkshire Hathaway.
Cohen’s history of investing in stocks like Apple, Wells Fargo, Netflix, and Alibaba (where he holds a $1 billion stake) suggests he may use GameStop’s cash to acquire stakes in undervalued companies.
3. Business Transformation and Cost Management
Cohen has focused on making GameStop profitable, emphasizing cost-cutting and streamlining operations. This includes closing unprofitable stores (Italy and Germany) and improving profit margins, with the company reporting a reduced net loss of $3.1 million in Q3 2023 compared to $94.7 million the prior year.
GameStop’s debt-free status and profitability suggest that Cohen’s cash reserves are a buffer for a broader turnaround strategy.
4. Potential for Acquisitions or New Ventures
Cohen’s track record with Chewy, where he built a successful e-commerce platform (from scratch) has fueled speculation he might use the cash for acquisitions or to pivot GameStop into new areas, such as digital gaming or entertainment. His 2020 letter to GameStop’s board urged a shift to e-commerce, though he later scaled back aggressive online plans in favor of optimizing brick-and-mortar stores.
Some believe Cohen is preparing for a transformative move, possibly leveraging the cash to capitalize on financial engineering.
Cohen takes no salary as CEO and owns 8.4% of GameStop (37.3 million shares), aligning his interests with shareholders. His recent purchase of 500,000 shares for $10.78 million in April 2025 signals confidence in the company’s future.
5. This personal investment, combined with the board’s trust in his investment decisions, suggests Cohen views the cash as a tool for long-term value creation, whether through Bitcoin, other equities, or operational reinvestment.
Challenges and Uncertainties
GME's revenue has declined (down 27% to $2.54 billion in the first nine months of fiscal 2024), and the company provides no forward-looking guidance or investor calls, leaving Cohen’s strategy opaque.
Critics argue that investing in external equities or Bitcoin deviates from GameStop’s core business, potentially diluting focus on retail gaming.
Cohen’s mixed record as an activist investor (Bed Bath & Beyond miss) has raised questions about execution, though his Chewy success bolsters his credibility.
Cohen and Warren Buffett?
Like Buffett’s approach of acquiring undervalued businesses for long-term value, Cohen aims to leverage GameStop’s substantial cash reserves...around $6.3 billion today (42% of market cap)...boosted by GME stock surges and timely equity offerings to then use those funds raised and invest in high-potential assets, including bitcoin/cryptocurrencies. However, while Buffett avoids speculative assets like Bitcoin, favoring stable, cash-flowing companies, Cohen’s strategy appears to embrace Bitcoin’s volatility as a high growth-lever, signaling a departure from Buffett’s conservative playbook.
Bitcoin Strategy Overview
Treasury Reserve Asset: In March 2025, GameStop’s board unanimously approved adding Bitcoin to its balance sheet, following Cohen’s meeting with Michael Saylor, a prominent Bitcoin advocate and head of Strategy (formerly MicroStrategy), in February 2025. This move positions GameStop among public companies like Strategy, adopting Bitcoin as a hedge against inflation and a driver of shareholder value.
Capital Allocation: GameStop raised $1.5 billion through convertible notes in April 2025, primarily to fund Bitcoin purchases, with plans to allocate a significant portion of its cash pile...potentially up to $5 billion...toward BTC. This strategy mirrors Strategy’s model, where Bitcoin holdings dominate its valuation, aiming to make GameStop’s stock a proxy for Bitcoin’s price movements.
Cohen’s Commitment: Cohen signaled confidence in this strategy by purchasing 500,000 additional GameStop shares for $10.78 million in April 2025, increasing his stake to 8.4%. This move, alongside the Bitcoin pivot, boosted retail investor sentiment, though the stock remains volatile due to its meme stock status.
Parallel with Berkshire Hathaway
Diversification: Buffett’s Berkshire Hathaway holds a diversified portfolio of businesses, from insurance to consumer goods, generating steady cash flows. Cohen’s Bitcoin strategy diversifies GameStop’s assets beyond its shrinking retail business, but it leans on speculative gains rather than stable income, contrasting Buffett’s risk-averse philosophy.
Long-Term Vision: Both Cohen and Buffett prioritize long-term value creation. Cohen’s Bitcoin bet aims to redefine GameStop as a fintech-oriented player, potentially attracting new investors, much like Buffett’s acquisitions expand Berkshire’s influence across industries.
Leadership Style: Cohen’s hands-on, high-conviction approach—seen in his Chewy success and GameStop turnaround efforts—echoes Buffett’s disciplined, concentrated investment style. However, Cohen’s embrace of a volatile asset like Bitcoin introduces a riskier dynamic absent in Buffett’s strategy.
In summary, Cohen’s ambition to emulate Berkshire Hathaway involves building a diversified, value-driven portfolio, but his Bitcoin strategy introduces a high-risk, high-reward element that diverges from Buffett’s conservative model. If executed well, it will completely transform GameStop’s future.
GME Technicals Flashing Buy Signals
On the weekly chart of GME (below) we see a clear pennant formation breakout. In addition, on Friday GME closed at its highest levels of 2025 while flashing an MACD buy signal.The 8 ema has also crossed the 21 ema (all are short term buy signals). Our next target is $49-51. Longer term, $100 plus ($121 ATH) which could take place relatively quickly on the heels of news of their first bitcoin buys (especially with the results that Strategy has put up over the last 5 years...keep reading).
GME Breakout
The GME Analogy That Investors Care About Most; Strategy (MSTR)
MSTR kicked off their Bitcoin buying strategy in August 2020. Below are the annual investment returns for MSTR each year since 2020.
2020: +237.7%. The significant gain was driven by Strategy's initial Bitcoin purchase in August 2020, which boosted investor interest.
2021: +0.6%. Despite continued Bitcoin accumulation, the stock experienced volatility due to Bitcoin's price fluctuations and market dynamics.
2022: -71.6%. The decline was influenced by a bearish cryptocurrency market and broader market challenges.
2023: +246.5%. The rebound was tied to Bitcoin's price recovery and renewed investor confidence in Strategy's Bitcoin strategy.
2024: +593.2%. This dramatic increase was fueled by Bitcoin's rally to record highs and Strategy's aggressive Bitcoin acquisition strategy.
5 year MSTR Chart (following launch of their BTC strategy) with average gains of 169.18%/yr. This BTC potential is what has GME investors most excited.
VRA Bottom Line: In our view, Ryan Cohen and team are 2-3 announcements away from making GameStop almost unrecognizable from the company it is today. The combination of Cohens understanding of financial engineering (through timely equity/debt offerings), Cohens move into Bitcoin (likely with an MSTR-like strategy) and what we expect will be additional companies added under the GME umbrella, have the potential to make this a stock that you never sell. Technically, GME is flashing strong short-term buy signals. Next up; we’ll soon get to see what takes place as they start putting their $6.3 billion in cash to work.
Exciting times for GME shareholders. Keep buying GME, a VRA Focus Stock. We are aggressively long.
Until next time, thanks again for reading.
Kip
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