- GameStop aims to join the list of public companies investing in Bitcoin.
- The video game retailer secured funding through a debt raise to implement its investment strategy.
- Bitcoin has declined by over 20% this year.
Recently, GameStop raised $1.5 billion through a convertible note offering, designating these funds to purchase Bitcoin.
This decision follows a unanimous vote by the company’s board in March to incorporate Bitcoin into its corporate balance sheet.
This strategy provides the company with an enticing proposition for investors:
“Investing in Bitcoin offers an alternative to a Bitcoin exchange-traded fund, presenting the opportunity for dividends,” stated Mateusz Kara, CEO of Ari10, a fintech firm, in an interview with DL News.
Investors holding GameStop’s debt can convert their holdings into equity, granting rapid capital access without diluting current shareholders.
In a filing with the Securities and Exchange Commission on Monday, GameStop announced its intention to utilize the net proceeds from this offering for “general corporate purposes, including the acquisition of Bitcoin.”
For GameStop, this move towards a corporate Bitcoin treasury signifies a strategic transition for the retailer, which has gained a reputation as a meme stock favorite.
However, this shift may add complexity to the company’s financial landscape.
On the positive side, it could boost stock prices. Companies such as Michael Saylor’s Strategy and Japanese investment firm Metaplanet have witnessed their stock prices soar following their Bitcoin investments.
Strategy, previously known as MicroStrategy, began its Bitcoin accumulation in 2020, becoming a major proponent of the digital asset due to Saylor’s leadership.
The software company holds an impressive $45 billion worth of Bitcoin on its balance sheet, the highest of any publicly traded entity.
Strategy’s stock has more than doubled within the past year and increased 23-fold since its initial Bitcoin acquisition in 2020. Meanwhile, Metaplanet has surged by 1,300% since it started buying Bitcoin last April.
However, GameStop’s Bitcoin strategy has not had a positive effect on its stock price amid a broader market sell-off.
The shares of the video game retailer have decreased by 22% since the announcement of its convertible notes offering aimed at purchasing Bitcoin last week.
Kara attributed this decline to the phenomenon of “buy the rumor, sell the news” among investors.
“Investors were enthusiastic about the prospect of Bitcoin investment but reacted negatively when the company’s board confirmed the decision to proceed,” Kara noted.
Jonathan Bixby, founder of Argo Blockchain and executive director at investment firm Tiger Royalties, believes that only shareholders with a low tolerance for risk might find this move concerning.
“In the long run, I do not see this initiative alarming GameStop’s shareholder base,” Bixby told DL News.
However, this investment strategy carries risks. Newer players in the Bitcoin treasury space have faced challenges amid the asset’s price downturn this year.
Bitcoin has plummeted by 22% from its peak of $108,000 reached in January.
The cryptocurrency market has suffered significant losses this year due to turmoil surrounding President Donald Trump’s inconsistent tariff policies.
Bitcoin often aligns with stock market trends, particularly those of the tech-heavy Nasdaq index.
Osato Avan-Nomayo is our DeFi correspondent based in Nigeria, focusing on DeFi and technology. If you have a tip, please reach out to him at osato@dlnews.com.
