GameStop Corporation, a video game retailer, has officially raised $1.5 billion, a part of which will be used to purchase Bitcoin and US dollar-backed stablecoins.
The fundraising plan was approved by GameStop’s board on March 25. The company said the funds will also support general business activities alongside its Bitcoin investment. GameStop finalized the deal on April 1 and disclosed it through a filing with the U.S. Securities and Exchange Commission (SEC).
GameStop Finalizes Convertible Debt Offering To Fund Crypto Investment
GameStop raised the capital by selling convertible notes, which are a type of debt that investors can later turn into company shares. The company initially planned to raise at least $1.3 billion, but strong demand allowed it to collect an additional $200 million, bringing the total to $1.5 billion.
According to GameStop, these convertible notes will mature on April 1, 2030, unless converted into shares earlier. The conversion rate is currently set at 33 shares of GameStop stock for every $1,000 of notes.
The company clarified that the raised funds will be used for general corporate purposes, including acquiring Bitcoin and stablecoins, following the company’s approved investment policy.
GameStop’s decision makes it one of the latest public companies to add Bitcoin to its balance sheet. This strategy became popular after Michael Saylor, executive chairman of MicroStrategy, promoted the idea of holding Bitcoin as a long-term asset. Several companies, including MicroStrategy and Tesla, have already allocated part of their cash reserves to Bitcoin.
GameStop’s cash reserves were reported at $4.77 billion as of February 1, 2024, up sharply from $921.7 million a year earlier. This gives the company enough flexibility to diversify some of its holdings into digital assets.
Stock Fails To Sustain Rally Despite Bold Bitcoin Investment Strategy
Despite the bold move, GameStop’s stock did not experience a lasting rally. On March 26, the stock price surged by nearly 12% after the Bitcoin investment plan was first announced. However, it fell almost 24% the next day as investors expressed concerns over GameStop’s overall business outlook.
When the $1.5 billion fundraising was completed on April 1, GameStop’s stock only rose 1.34% to close at $22.61. After-hours trading showed a modest 0.5% increase.
This is not GameStop’s first attempt to enter the crypto space. In 2022, the company launched a crypto wallet to allow customers to store digital assets. However, the wallet was shut down in November 2023 due to regulatory uncertainty in the crypto market.
GameStop first gained global attention in early 2021 during the meme stock craze. Online traders coordinated to push the stock price up by more than 1,000% within a month, challenging hedge funds that had heavily bet against the company.
