GameStop’s stock saw a sharp 25% intraday drop on Thursday, following the company’s announcement of a strategic shift that includes issuing $1.3 billion in convertible bonds to fund a Bitcoin acquisition. This move, part of an updated investment policy approved by the board, has sparked concerns among investors about the company’s long-term direction.
GameStop Embraces Bitcoin as a Treasury Reserve
GameStop is planning a private sale of 0% convertible senior notes maturing in 2030. The proceeds will be used for general corporate purposes, including purchasing Bitcoin, mirroring strategies adopted by companies like MicroStrategy, which has significantly increased its Bitcoin holdings over the years. However, the decision has raised skepticism about whether Bitcoin can revive GameStop’s struggling business model.
Bret Kenwell, a U.S. investment analyst at eToro, expressed concerns about GameStop’s shift in focus, stating, “There are question marks with GameStop’s model. If Bitcoin is going to be the pivot, where does that leave everything else?” This skepticism reflects broader doubts about GameStop’s ability to sustain its retail business while making such a significant shift into digital assets.
Stock Slump and Retail Challenges
Despite an initial 14% surge in after-hours trading, GameStop’s stock opened at $25.78 per share on Thursday before dropping to a low of $21.16. The decline suggests that investors remain uncertain about the company’s Bitcoin-focused strategy and whether it can successfully execute the pivot while navigating ongoing retail challenges.
Adding to concerns, GameStop also announced plans to close additional stores this year, further signaling struggles in its core retail business. With investors questioning the timing and execution of its Bitcoin investment, the company faces a critical test in balancing its legacy gaming business with its new digital asset strategy.
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