GameStop Proposes to Raise $1.3B in Convertible Debt for Bitcoin Purchases
GameStop has announced plans to offer $1.3 billion in convertible notes with a 0% coupon, in a move to purchase Bitcoin using net proceeds. The announcement arrives simultaneously with the video game retailer’s approval of adding Bitcoin to its treasury reserves. GameStop said that the $1.3 billion of convertible senior notes will have a five-year maturity until April 1, 2030. Further, it would grant initial purchasers up to an additional $200 million aggregate principal of notes, the official release noted. GameStop added that it would use the net proceeds from the offering “for general corporate purposes.” This includes Bitcoin purchases, consistent with GameStop’s Investment Policy.
GameStop Mirrors Strategy in Building Bitcoin Stack
Michael Saylor’s Strategy (previously MicroStrategy) has taken on millions in debt to accumulate more Bitcoin. For instance, the company has used a unique strategy to raise an additional $175 million to add more Bitcoin to its balance sheet. Strategy already has $700 million convertible debt offering, maturing in 2028. Further, high demand for this convertible note has brought in other major crypto players, including Bitcoin miner MARA Holdings, to raise billions to add to their own stacks.
Reflection on Stock Prices
GameStop’s Bitcoin strategy has rallied its shares 15.2% to $29.19 on Wednesday. According to J.P. Morgan data, the company was the seventh most traded stock by U.S. retail investors on Wednesday at 10 a.m. ET. Michael Pachter, managing director at Wedbush, told Reuters that GameStop “clearly understands” its shareholder base. “[Investors] want GameStop to take their money and invest in things like Bitcoin, and the company is accommodating their wishes.” Pachter also added that GameStop’s strategy has changed about six times in three years and its Bitcoin stockpile plan reflects that of MicroStrategy. Meanwhile, Bitcoin traded around $87,200 late Wednesday and is up 1.6% over the past week. It is currently trading at $87,350 at press time.