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GameStop Targets Crypto: $1B In Convertible Senior Notes For Bitcoin Purchase

GameStop, the video game retail company, experienced a significant downturn in its stock (GME) price, sliding more than 8% in after-hours trading on Wednesday, following the announcement that the company plans to raise $1.3 billion to invest in Bitcoin (BTC) through the issuance of convertible senior notes. 

This move comes just a day after GameStop shares surged nearly 12% when the company revealed that its board had unanimously approved an update to its investment policy, designating Bitcoin as a treasury reserve asset.

GameStop Planned Bitcoin Investment

について planned investment in Bitcoin follows a recent trend of GameStop exploring cryptocurrency ventures. Reports surfaced about a month ago indicating that the company was considering investments in the digital currency space. 

Speculation intensified on February 8 when GameStop CEO Ryan Cohen shared a social media post featuring a photo with Michael Saylor, the CEO of Strategy (MSTR), a company renowned for its substantial Bitcoin holdings, which exceed 447,000 BTC tokens.

Saylor’s strategy of heavily investing in Bitcoin has proven fruitful, with MicroStrategy’s stock appreciating over 84% in the past year, largely in tandem with rising Bitcoin prices. However, Wall Street analysts remain cautious about GameStop’s ability to replicate this success. 

Skepticism From Wall Street Experts

“The company’s strategy, which has changed about six times in three years, is they’re going to buy cryptocurrency and be just like MicroStrategy,” noted Wedbush analyst Michael Pachter. 

Pachter further expressed skepticism about the effectiveness of this approach, particularly given Strategy trades at roughly two times its Bitcoin holdings. Pachter added, “If GameStop were to buy all Bitcoin with their $4.6 billion in cash and trade at two times their Bitcoin holdings, the stock would drop five bucks.”

Additionally, GameStop reported its fourth-quarter earnings results after the market closed on Tuesday, revealing $1.28 billion in net sales for the quarter—a 28% decline compared to the same period last year. 

For the full fiscal year, the company posted an adjusted EBITDA of $36.1 million, a decrease from $64.7 million reported the previous year.

GameStop

Experts’ concerns may also be stemming from Bitcoin’s volatility, which saw a more than 25% retracement from its record high of $109,000 reached during the broader market rally in January. 

This developed into a drop toward the $76,000 mark on March 11th, a level not seen since November 2024. However, the market’s leading crypto has recovered to around $87,477 at the time of writing, reflecting a 4.5% increase in the fourteen-day time frame.

Featured image from DALL-E, chart from TradingView.com


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