GameStop announced today that it’s offering $1.3 billion worth of stock to fund Bitcoin acquisitions, which prompted a 12% gain in its stock.
GameStop’s plan has caused an impressive price rally, but it is still risky. With this move, it plans to incur more debt than its total net sales in Q4 2024.
GameStop To Buy Bitcoin With Stock Offering
GameStop, an American electronics retailer that has dabbled in Web3, is preparing to substantially re-enter the crypto space. Yesterday, the firm announced that it would begin using Bitcoin as a treasury asset, boosting its stock price.
Today, GameStop detailed via press release how it plans to fund these Bitcoin acquisitions.
“GameStop today announced that it intends to offer… $1.3 billion aggregate principal amount of 0.00% Convertible Senior Notes… to persons reasonably believed to be qualified institutional buyers. GameStop expects to use the net proceeds from the offering for general corporate purposes, including the acquisition of Bitcoin,” it claimed.
The first rumors about GameStop’s pivot to Bitcoin circulated when its CEO, Ryan Cohen, met with Michael Saylor. Under Saylor, MicroStrategy became one of the world’s largest Bitcoin holders.
Recently, he’s been funding these acquisitions through massive stock sales, and GameStop is apparently replicating the strategy.
Meanwhile, GameStop’s stock price has experienced positive momentum since the announcement. It increased nearly 20% throughout the week and almost 12% today.
By pursuing the Bitcoin strategy, GameStop is opening itself up to lucrative new opportunities and potential new risks. Since Saylor pioneered this plan, MicroStrategy has taken on enormous debts through its stock sales and is practically unable to sell its Bitcoin.
However, its MSTR stock price also ballooned wildly at a time when its core business model was becoming unviable. GameStop will hope for similar stock market results after its Bitcoin accumulation.
Nonetheless, the company is still planning to incur more debt than its total net sales in Q4 2024. The firm’s retail activities remain a multibillion-dollar enterprise, but it’s planning a risky move. Hopefully, it’ll pay off without much difficulty.
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