A new turn toward Bitcoin investment sent GameStop
shares sliding on Thursday, as the company announced a $1.75 billion
convertible notes offering that could fund further purchases of the
cryptocurrency.
Following Strategy
The move, which echoes a strategy adopted by
MicroStrategy, has triggered skepticism among investors amid broader concerns
about GameStop’s weakening core business.
The company stated that proceeds from the offering
would support general corporate purposes, which now include potential crypto
investments under its revised investment policy.
“GameStop Corp. today announced that it intends to offer,
subject to market conditions and other factors, $1.75 billion aggregate
principal amount of 0.00% Convertible Senior Notes due 2032 in a private
offering to persons reasonably believed to be qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended,” the company announced.
That policy saw its first major deployment last month
when GameStop acquired 4,710 bitcoins, valued at over $500 million. The market
response was immediate and sharp. Shares of GameStop fell over 15% in premarket
trading following the news.
That drop came just a day after the stock declined 6%
on weaker-than-expected quarterly earnings. GameStop reported a 17%
year-over-year revenue decline to $732.4 million in the fiscal first quarter,
highlighting the ongoing shift in consumer behavior toward online gaming and
digital distribution.
Aggressive Accumulation of Bitcoin
GameStop appears to be taking cues from MicroStrategy,
recently renamed Strategy, which has become known for its aggressive
accumulation of bitcoin, financed in part through convertible debt.
That approach led to large gains in Strategy’s share
price during bitcoin bull runs, though the stock has also experienced extreme
volatility. GameStop’s shift toward crypto investment introduces a new layer of
This article was written by Jared Kirui at www.financemagnates.com.
