- GameStop looks to join the ranks of public firms that hold Bitcoin.
- The video game retailer completed a debt raise to fund its investment plan.
- Bitcoin is down more than 20% this year.
GameStop just raised $1.5 billion via a convertible note offering and has earmarked the funds to acquire Bitcoin.
The move comes after the video game retailer’s board voted unanimously in March on a plan to add Bitcoin to its corporate balance sheet.
The advantage is the company can add a new appeal for investors:
“A company that invests in Bitcoin is an alternative to a Bitcoin exchange-traded fund, but one that can pay dividends, for example,” Mateusz Kara, CEO Ari10, a fintech company told DL News.
GameStop debt holders can convert their investments into equity, allowing the flexibility of quick access to capital without diluting shareholders.
GameStop, in a filing with the Securities and Exchange Commission on Monday, said it plans to use the net proceeds from the offering for “general corporate purposes, including the acquisition of Bitcoin.”
For GameStop, a corporate Bitcoin treasury marks a strategic shift for the video game retailer that has become a meme stock darling.
The move could introduce a new layer of complexity to the company’s financial portfolio.
On one hand, it could be a boon for its stock price. Companies like Michael Saylor’s Strategy and Japanese investment firm Metaplanet have seen their stock prices skyrocket since they began to stockpile Bitcoin.
Strategy, formerly MicroStrategy, began acquiring Bitcoin in 2020. The company has become synonymous with Bitcoin with its broad-based adoption of the digital asset championed by Saylor.
The software company holds $45 billion worth of Bitcoin on its corporate balance sheet, the most for any publicly listed firm.
Strategy’s shares have more than doubled in the last year and have grown 23-fold since its first Bitcoin purchase in 2020. Metaplanet has skyrocketed 1,300% since it began acquiring Bitcoin last April.
GameStop’s Bitcoin pivot hasn’t helped its stock price amid a selloff more broadly.
Shares of the video game retailer have fallen 22% since it announced its convertible notes offering to raise capital to buy Bitcoin last week.
Kara attributed the sell-off to the “buy the rumour, sell the news” phenomenon among investors.
“The market bought rumours about Bitcoin investment but sold the fact when the company’s board decided to buy Bitcoin,” Kara said.
For Jonathan Bixby, founder of Argo blockchain and executive director of investment firm Tiger Royalties, only shareholders with lower risk tolerance will be concerned by the move.
“I do not see this move spooking GameStop’s shareholder base in the longer term,” Bixby told DL News.
The investment strategy is not without its risks. Newer entrants to the Bitcoin treasury asset play have been caught in the asset’s price slump this year.
Bitcoin is down 22% from its peak price of $108,000 achieved in January.
Cryptocurrencies have cratered this year under the market turmoil triggered by uncertainty over President Donald Trump’s flip-flopping tariff policies.
Bitcoin tends to track the stock market, especially the tech-heavy Nasdaq.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? please contact him at [email protected].
