Just last Tuesday, GameStop announced that it would raise funds to purchase Bitcoin through convertible bonds. In a filing with the U.S. Securities and Exchange Commission (SEC), the company announced yesterday that the previously announced offering of $1.5 billion in 0.00% convertible bonds maturing in 2030 had been completed, including the full exercise of the initial purchaser’s option to purchase an additional $200 million in bonds.
GameStop’s announcement last week initially led to a rise in the share price. However, the price fell sharply in the following days. By investing in Bitcoin, GameStop is following the example of Michael Saylor‘s company, Strategy. The company pursued a similar strategy in August 2020 and began acquiring Bitcoin on a large scale. Strategy now holds just over 500,000 Bitcoin, which corresponds to 2.5 percent of the total supply of 21 million Bitcoin ever available.
“GameStop is clearly following Strategy’s model and relative success,” Nathan Cox, CIO of Two Prime Digital Assets, told The Block. With more than $4 billion in cash and $3.8 billion in revenue in 2024, GameStop has a solid foundation to significantly increase its Bitcoin holdings. Cox sees this as a strategic opportunity for the company to reposition itself in a volatile market.
The decision to invest part of its capital in Bitcoin is not without controversy. Although the cryptocurrency has appreciated significantly in recent years, it remains a highly speculative asset with significant price fluctuations. Time will tell whether the bet on Bitcoin pays off. Investors should stay on the sidelines with GameStop stock for the time being.
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