Stock in GameStop drops following announcement of $1.75 billion fundraising effort after investing in Bitcoin

GameStop's latest financial move sparking crypto curiosity

Stock in GameStop drops following announcement of $1.75 billion fundraising effort after investing in Bitcoin

GameStop, the well-known video game retailer, declared that it's ready to auction $1.75 billion worth of convertible senior notes, according to a juicy press release.

The notes, which won't accrue interest, will expire in 2032, GameStop revealed, mentioning that the conversion price for these notes will be decided later on. Convertible notes give the buyer an option to convert the debt into common stock under specific circumstances.

While GameStop did snag a hefty 4,710 Bitcoins last month, the company has kept mum about whether these funds will be used to gather more of the largest cryptocurrency or could potentially grab other cryptos that they've previously had on their balance sheet.

Instead, the company stated the money will be used for "general corporate purposes," including making investments in line with GameStop's investment policy and possible acquisitions. GameStop mentioned in March that it's revamped its investment policy to allow Bitcoin to be utilized "as a Treasury Reserve Asset."

GameStop's stock price took a tumble during after-hours trading, dropping to $25.64, according to Yahoo Finance. Since GameStop gave a heads up that it's thinking about Bitcoin back in March 26th, their shares have fallen by 9.5% from $28.36.

GameStop checked off the purchase of its Bitcoin stash between May 3rd and June 10th, but it didn't specify the average purchase price or the exact cost. With 4,710 Bitcoins being worth approximately $512 million at the time, it seems GameStop didn't spend all the cash it raised on Bitcoin.

Their most recent earnings report from March showed that Texas-based GameStop had $4.7 billion in cash and cash equivalents, up considerably from $921 million a year ago.

GameStop CEO Ryan Cohen hinted at a potential Bitcoin purchase way back in February when he posted a snap with Strategy Executive Chairman and co-founder Michael Saylor, who's known for his love of Bitcoin. Strategy is the biggest corporate Bitcoin treasury firm, with over $63 billion worth of BTC, which it began purchasing in 2020.

Edited by Andrew Hayward

The Bigger Digital Asset Picture

GameStop hasn't yet been explicit about whether it plans to invest in other cryptocurrencies aside from Bitcoin using the funds from the recent convertible senior notes offering. The company has a broad investment strategy that includes potential digital asset investments, but for now, Bitcoin seems to be the priority. The revised investment policy does suggest a broader approach to digital assets, but specific details about investing in other cryptocurrencies are still lacking. The company's main focus might be on Bitcoin, following their acquisition of 4,710 Bitcoins valued at over $500 million, leaving the possibility of other crypto investments still on the table.

1. GameStop, despite investing in 4,710 Bitcoins, remains ambiguous about using the funds from the convertible senior notes offering to acquire more Bitcoin or other cryptos.
2. The company's revised investment policy shows a broader approach to digital assets, suggesting a potential for investment in other cryptocurrencies like Ethereum (ETH).
3. If GameStop decides to diversify its cryptocurrency holdings, it could consider investing in tokens from Initial Coin Offerings (ICO) or non-fungible tokens (NFTs), which are also part of the digital asset market.
4. The digital asset market is not limited to cryptocurrencies but also includes finance-related ventures that utilize blockchain technology, such as digital stocks.
5. Investors looking to make moves in the digital asset space can consider GameStop's future decisions as a signal of how traditional finance (stock-market) players approach cryptocurrencies, like Bitcoin and Ethereum, in their investment portfolios.
6. By analyzing GameStop's digital asset strategy, we can gain insights into potential trends in investing in digital assets, as the company represents a significant player in the retail sector.
7. In the broader context of finance and digital assets, GameStop's entry into the crypto market could signal a growing interest in cryptocurrencies among traditional finance players, potentially fueling further growth in the crypto market.

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