GameStop Corporation (GME), the video game retail giant, has successfully completed a convertible debt offering that raised $1.5 billion, with a portion of the funds intended for Bitcoin purchases.
Initially, the offering aimed to secure at least $1.3 billion, but investors opted to acquire an additional $200 million in aggregate principal amount of notes, as disclosed in GameStop’s filing with the Securities and Exchange Commission on April 1.
“The company intends to utilize the net proceeds from this offering for general corporate purposes, including the purchase of Bitcoin in alignment with the Company’s Investment Policy,” GameStop remarked.
The convertible notes represent debt that can be transformed into equity at a later date, set to mature on April 1, 2030, unless they are converted, redeemed, or repurchased beforehand.
The initial conversion rate for these notes will be 33 shares of Common Stock for every $1,000 principal amount of notes, as stated in the filing.
Following the completion of the convertible debt offering, GameStop shares experienced little fluctuation. As per Google Finance data, GME ended the April 1 trading session with a 1.34% increase at $22.61, and an additional 0.5% rise post-market.
GameStop’s share price remained relatively stable after announcing the completion of the convertible debt offering. Source: Google Finance
Positive sentiment from shareholders initially drove the stock up nearly 12% to $28.36 on March 26, following GameStop’s Bitcoin (BTC) announcement, but this surge was short-lived as the next day saw GME shares tumble almost 24% to $21.68.
At the time, analysts suggested that this muted market response mirrored shareholders’ concerns regarding GameStop’s fundamental business challenges.
GameStop Embraces the Bitcoin Trend
On March 25, GameStop announced that its board had given the green light to invest in Bitcoin and US-dollar-pegged stablecoins using the proceeds from the notes along with its cash reserves. As of February 1, those reserves totaled $4.77 billion, a significant increase from $921.7 million a year prior, according to its fourth-quarter financial documents for 2024.
GameStop is relatively late to the trend among public companies that are establishing Bitcoin treasuries, following a strategy popularized by Micheal Saylor.
Related: Metaplanet adds $67M in Bitcoin following 10-to-1 stock split
The video game retailer had previously ventured into the crypto realm with a crypto wallet for its users, but ultimately ceased operations in November 2023 due to regulatory uncertainties.
GameStop is notably recognized as the first example of a meme stock phenomenon, following a remarkable short squeeze in 2021 that propelled the stock more than 1,000% within a month, flipping the script on hedge funds that profited by short-selling the company.
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