GameStop Corp. Is Making Waves Once Again, This Time with a High-Stakes Move into Cryptocurrency

GameStop Corp. is making waves once again, this time with a high-stakes move into cryptocurrency. The struggling video game retailer plans to sell $1.3 billion in convertible bonds to finance Bitcoin purchases

GameStop Corp. (NYSE:GME) is venturing into cryptocurrency once again, aiming to sell $1.3 billion in convertible bonds to finance Bitcoin purchases, adopting a strategy popularized by MicroStrategy (NASDAQ:MCR).

The struggling video game retailer plans to add Bitcoin as a treasury reserve asset, shifting its financial strategy.

This move follows a report by The Block, which stated that investors appear to be growing more cautious regarding companies using bond sales to fund Bitcoin purchases.

Investors were more receptive when MicroStrategy launched its Bitcoin-backed bonds in late 2024. However, recent offerings from the firm have seen decreased demand, leading to adjustments in the bond terms.

In November, MicroStrategy sold $1 billion in convertible bonds with a 55% conversion premium.

This premium has now decreased to 35% and 40% for GameStop’s bonds, which will mature in 2030.

The bonds are also convertible into shares of GameStop’s common stock at a price per share of $81.63, and they will pay a coupon rate of 0%.

The video game retailer’s move comes as it battles its own struggles.

GameStop’s fourth-quarter revenue sank 28% to $1.28 billion, lagging behind analysts’ estimates of $1.3 billion.

Sales of hardware, accessories, and software also took a hit, declining by 27%, 27%, and 26%, respectively.

Despite the bleak report, investors are anticipating a turnaround in the second half of 2024 as the company rolls out its new subscription service, Gamepass.

GameStop isn’t selling new shares to raise cash. Instead, it’s pulling in $1.3 billion through convertible bonds.

That way, shareholders don’t immediately feel the impact, but it also means the company is betting big on Bitcoin’s price swings. If Bitcoin makes a strong comeback, this could be a smart play. If not, GameStop might find itself in an even tougher spot financially.

As more businesses follow this Bitcoin-backed funding approach, it will be interesting to see how long it takes for regulators to intervene.