(Bloomberg) – Gamestop Corp. is looking to sell $1.3 billion in convertible debt to fund the purchase of Bitcoin, as it embraces a strategy developed by Michael Saylor of Cryptocurrency Advocate.
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The video game retailer recovered after the board said on Tuesday that it approved a plan to add Bitcoin as a Treasury reserve asset. That was followed Wednesday by filing announcing planned sales of bonds used for general purposes, including the acquisition of Bitcoin.
Grapevine, Texas-based GameStop is on a growing list of public companies that assume convertible debts to take advantage of cryptocurrency rises. This tactic was pioneered by the strategy of Saylor, an enterprise software company officially known as micro-strategy. This has acquired over $40 billion in Bitcoin and has seen its stock price rise.
Convertible bonds are hybrid devices that allow owners to convert bonds into a given number of stocks if the stock rises above a certain level. GameStop sells the memos scheduled for 2030 at a 35% to 40% conversion premium, according to people familiar with transactions that asked the information not to be identified because it is private. Premium determines the price at which the conversion occurs.
GameStop’s entry into the market is despite investors appearing to be skeptical of their strategy. The premiums GameStop is trying to offer in bonds are less than the roughly 55% premium on similar issues from its November strategy. Recently, the strategy sold $2 billion in February, offering investors a more lucrative 35% premium. It suggests that investors are demanding more from the company, along with conditions regarding the increase in equipment, such as debt provided by the strategy.
Gamestop shares fell after the filing was announced on Wednesday, wiping out some of their profits early in the day. Stocks fell 6.6% to $26.44 as of 5:30pm New York time in aftermarket trading.
A GameStop spokesman did not immediately respond to requests for comment.
GameStop’s push to quickly increase Bitcoin purchases is against a completely different background from when strategy and other imitators flooded the market at the end of 2024. Cryptocurrency is down 18% from its all-time high in January, with investors bailing a variety of dangerous assets in tariff uncertainty and crude economic data.
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