GameStop Plans $1.3 Billion Bitcoin Acquisition Via Convertible Notes

GameStop, the video game retailer, has announced a significant strategic move by planning to acquire Bitcoin through a $1.3 billion offering of convertible senior notes. This decision comes after the company revealed its intention to use a portion of its corporate cash or future debt to purchase digital assets, including Bitcoin and US-dollar-pegged stablecoins. The convertible senior notes, which are debt instruments that can later be converted into equity, will be used for general corporate purposes, with a specific focus on acquiring Bitcoin in line with the company's investment policy.

The announcement was made after markets closed on March 26, following a day in which GameStop shares jumped nearly 12%. The company's cash reserves stood at $4.77 billion on February 1, a substantial increase from $921.7 million a year earlier. This financial strength positions GameStop to pursue its Bitcoin acquisition strategy effectively. The company reported a net income of $131.3 million for the fourth quarter of 2024, compared to $63.1 million for the same period the previous year. Despite a year-over-year decline in net sales of $511 million, GameStop has been aggressively cutting expenses, including closing 590 stores throughout the United States in 2024.

GameStop's move to acquire Bitcoin follows a similar strategy adopted by Strategy, which first added Bitcoin to its treasury in August 2020. As of December 2024, Strategy’s stock had gained significantly since adopting its crypto strategy. Other companies, such as Metaplanet and Semler Scientific, have also seen substantial increases in their share prices after announcing plans to purchase Bitcoin. According to available data, 32 publicly traded companies hold Bitcoin on their balance sheets, indicating a growing trend among corporations to incorporate digital assets into their financial strategies.

The decision to issue convertible senior notes for the acquisition of Bitcoin is a strategic move that aligns with GameStop's broader investment policy. By leveraging debt financing, the company aims to capitalize on the potential growth and stability that Bitcoin can offer. This move not only diversifies GameStop's asset portfolio but also positions the company as a forward-thinking entity in the rapidly evolving financial landscape. The convertible nature of the notes provides flexibility, allowing GameStop to convert the debt into equity if market conditions are favorable, thereby mitigating potential risks associated with the acquisition.

GameStop is offering $1.3 billion in convertible notes — a type of debt that can later be converted into stock — without any interest payments. These notes will be due in 2030 and will only be available to large institutional investors. The company is also giving these investors the option to buy up to an additional $200 million in notes within 13 days of the initial sale. This strategic move allows GameStop to secure substantial funding while providing investors with the potential for future equity conversion, aligning with the company's long-term goals.

GameStop's foray into the crypto world is not entirely new. The company launched an NFT marketplace in 2022 but closed it in February 2024, citing regulatory uncertainty. This experience highlights the challenges and complexities involved in navigating the digital asset landscape. However, the company's decision to acquire Bitcoin demonstrates its commitment to exploring innovative financial strategies and adapting to the evolving market dynamics.

In February, CEO Ryan Cohen hinted at the move by posting a photo with Strategy Chairman Michael Saylor. This public acknowledgment underscores the strategic alignment between GameStop and Strategy, both of which are embracing Bitcoin as a key component of their treasury management. The move by GameStop to follow Strategy's lead in acquiring Bitcoin is a clear indication of the growing acceptance and integration of digital assets within corporate financial strategies.