On March 26, GameStop, a leading video game and consumer electronics retailer, saw a 12% increase in its stock value after declaring its intention to buy Bitcoin (BTC). The company intends to fund this acquisition through a debt financing scheme.
Following the close of the market on the same day, GameStop disclosed a $1.3 billion offering of convertible notes. These senior notes, a form of debt that can later be converted into stock, will serve general corporate purposes, including the purchase of Bitcoin, as per the company’s announcement.
“GameStop anticipates utilizing the net proceeds from the offering for general corporate purposes, including Bitcoin acquisition in line with GameStop’s Investment Policy,” the company stated. On March 25, the company revealed a strategy to employ a part of its corporate cash or future debt to invest in digital assets, including Bitcoin and US-dollar-pegged stablecoins.
As of February 1, GameStop’s cash reserves were $4.77 billion, compared to $921.7 million the previous year. The company’s shares closed at $28.36 on the NYSE according to Google Finance, representing an 11.65% increase for the day.
For the fourth quarter of 2024, the company posted a net income of $131.3 million, compared to $63.1 million for the same period the previous year. Despite a $511 million decrease in net sales year over year, the company has been actively reducing costs, including closing 590 stores in the United States in 2024.
GameStop was a key player during the 2021 meme stock frenzy when retail traders arranged a “short squeeze” that rocketed the stock price. This resulted in some hedge funds shutting down due to the losses incurred, lending a “David vs. Goliath” story to the rise of the GameStop meme stock.
GameStop is now following the path of Strategy, which started adding Bitcoin to its treasury in August 2020. As of December 2024, Strategy’s stock had seen a 3200% increase since initiating its crypto strategy. Similarly, the Japanese company Metaplanet, which plans to buy 21,000 BTC by 2026, experienced a 4800% increase in its stock price after making the announcement. According to CoinGecko, 32 publicly traded companies currently hold BTC on their balance sheets.
