GameStop Raises $1.7 Billion for Bitcoin Purchase

GameStop has successfully completed a $1.5 billion offering of convertible senior notes to investors, with the proceeds earmarked for purchasing Bitcoin to hold in its corporate treasury. The company initially announced its Bitcoin plans last week, adding the asset to its list of acceptable treasury assets and planning to raise $1.3 billion through the offering. An additional $200 million worth of notes were sold, bringing the total amount raised to $1.7 billion. The convertible senior notes, which mature on April 1, 2030, left GameStop with approximately $1.48 billion in net proceeds after accounting for discounts and company expenses. The firm has stated that it expects to use the net proceeds from the offering for general corporate purposes, including the acquisition of Bitcoin.

By selling convertible senior notes to fund Bitcoin purchases, GameStop is following a strategy similar to that of Strategy, a public company known for holding the largest amount of Bitcoin in its treasury. Strategy began acquiring Bitcoin in 2020 and currently holds a significant amount of the cryptocurrency. GameStop's CEO, Ryan Cohen, has shown support for corporate Bitcoin reserves, as evidenced by a photo shared in February with Michael Saylor, the co-founder and Executive Chairman of Strategy, who is a vocal advocate for corporate Bitcoin treasury reserves.

While GameStop's initial announcement of its Bitcoin plans sparked excitement and a rise in the firm's stock price, investors expressed concerns about the company raising more debt to launch its crypto reserve. This led to a sharp decline in GameStop's stock price late last week. However, the stock showed signs of recovery on Tuesday, finishing the day up 1.3% at $22.61, and continued to climb in after-hours trading. This move by GameStop to fund its Bitcoin reserve through a convertible notes offering demonstrates the company's financial acumen and strategic foresight. By leveraging debt to acquire Bitcoin, GameStop aims to capitalize on the potential appreciation of the digital currency while maintaining financial flexibility. This approach allows the company to benefit from the upside potential of Bitcoin without compromising its liquidity or operational capabilities.