Summary GameStop has transformed from a video game retailer to a cash-rich company, holding $4.8 billion in cash out of $5.9 billion in total assets. CEO Ryan Cohen aims to leverage GME's cash and brand to create a new-age investment holding company, with crypto as a primary target. GME's unique position and loyal investor base provide an opportunity to pursue investment initiatives for mutual profit, including in the crypto and blockchain space. With $5 billion in cash and significant intangible assets not reflected on a balance sheet, GME is rated a speculative buy due to its potential to unlock substantial value. Conventional wisdom would have you believe that GameStop Corp. ( GME ) is a specialty retailer that sells video games and other entertainment products through its online channels and bricks and mortar locations. That may have been the case a few years ago, but not today. As of February 1, 2025 , GME had $4.8 billion in cash out of $5.9 billion of total assets on its balance sheet. Total shareholder's equity is $4.9 billion. The company earns a profit because of its interest income, not from its video game retailer operations. GME's value and future success as a corporate entity is tied to video games and toy sales as much as Walmart Inc. ( WMT ) might be (minus all the other goods sold at Walmart, of course). At a $10 billion market cap, GME is trading at double its cash. The bullish case for GME going forward is how CEO Ryan Cohen will deploy that cash and leverage the brand name into a kind of new age investment holding company. I believe that GME is in a unique position to do this successfully. GME scores a grade of D according to Seeking Alpha's valuation system: Seeking Alpha The earnings and EBITDA metrics are wonky because the loss-generating video game business is more than offset by the interest income. The sales metrics don't compare well to GME's sector median in the Computer and Electronics Retail industry. But there is an easy way to get better grades on these metrics. Transform the business into one in an industry that is valued more aggressively so that the sector median comparables are much higher. Cohen definitely has an advantage in being able to use retail demand for the stock as a bank account. However, he still did an outstanding job in changing this company's course from a dying retail brand on the brink of bankruptcy into one flush with cash. The most recent capital raise of $1.5 billion of convertible notes at zero interest rate underscores that ability to leverage GME's unique position to add value to the company. Those notes convert at a $29.85 stock price. So the company is getting free money and essentially increasing the book value per share once those notes get exercised. These notes limit upside as it will dilute shareholders above $30, but also increase the floor. As the stock price currently sits in the low $20's, the latter may be a bigger concern than the former. The reaction to the capital raise was initially negative, but thanks to the drop in price, now represents a good entry point for GME bulls. GME looks towards investing in crypto, and there are lucrative opportunities abound in this developing field GME is looking to use that cash raised to set up a Bitcoin reserve . Cohen's interest in the cryptocurrency world is well established, as he has been seen with Strategy Incorporated ( MSTR ) CEO Michael Saylor. However, I don't think being an MSTR copycat is the strategy Cohen should or will pursue. GME's position as a meme stock with a large, loyal following has an opportunity for something much more lucrative and is less dependent on the price of Bitcoin. GME has been open to more speculative crypto and blockchain related initiatives in the past. The company created its own NFT marketplace back in 2022. However, it was shut down last year, citing regulatory uncertainty of the crypto space. There has been speculation that it will re-open as regulations shift more favorably, but at this point in time there is no word from that company. In the meantime, there appears to be a demand for GameStop NFTs on secondary markets. While the NFT initiative has so far been a failure, it shows that GME is willing to dive into blockchain-based initiatives. Particularly if they are viewed as the next big thing. DePIN, or Decentralized Physical Infrastructure Networks, is the next step in the evolution of crypto mining. DePIN will power the next generation of blockchain infrastructure in a Web3 environment and is projected to grow to a $3.5 trillion market by 2028. It enables regular people to lend out their spare computing power to certain projects in order to earn tokens (basically mining crypto) by setting up their own nodes. Each device is its own node, so people can set up dozens or hundreds of nodes if they have access to that amount of equipment. Industries such as telecom, data storage and energy have already embraced this innovation. JPMorgan has commented on the bright future of DePIN. Most DePIN projects earn node runners only a few dollars a month per node while the top earners make a few hundred a month. Some of the more popular and higher earning DePIN projects are Akash, Helium and Geodnet. The higher earning projects require more advanced equipment and knowledge. However, a DePIN aggregator like Hivello looks to simplify the node-running process for people who are less tech-savvy and who have just normal desktop and laptop computers at home without GPUs or other fancy equipment. While the typical user earns only a few dollars a month, the potential is there to earn hundreds a month per device as the industry matures. GME is in a unique position to take advantage of the DePIN movement more than any other company. The Bitcoin investment strategy by MSTR is more or less a passive one. GME has an opportunity to actively make money in crypto by leveraging the DePIN industry. GME has a dedicated base of millions of retail investors, from Roaring Kitty down to people who own a few shares as the only stock in their portfolio. GME could partner with one or more DePIN projects or aggregators, slap a GameStop brand on it, and encourage its investors to become node runners. GME investors pride themselves as being part of a larger community or movement. Running DePIN nodes is a way for them to personally make money as well as help make GME money while contributing to a larger cause. As the DePIN industry is young, most investors will make only a few dollars a month at first. But it would be GME's ability to sell a vision of something larger that would get its base to be patient as the earnings grew for everyone, itself included. I would like to make it clear that this is just speculation on my behalf. There has been no word from GME or Ryan Cohen regarding their interest in DePIN or that they even know about this initiative at this point in time. DePIN is just one example where I think GME has a unique ability to use its cash, brand and dedicated investors to its advantage as an activist investor. This is what people who look purely at the numbers on GME miss. Cohen has an opportunity to unlock value out of that $5 billion in cash unlike anyone else can. Whether that happens to be DePIN or some other initiative. That's why GME trades double its cash right now. It's essentially $5 billion in cash plus $5 billion in intangible assets waiting to be unlocked. Whether that $5 billion in brand value turns into something much higher remains to be seen. Because of this upside potential, I am willing to rate GME a speculative buy at this level.
