GameStop Plans $1.75 Billion Debt Offering Amid 17% Revenue Decline

GameStop, the video game retailer that gained notoriety as a meme stock, has announced plans to raise $1.75 billion through the issuance of convertible senior notes. The notes, which do not carry interest, are set to mature in June 2032. The offering includes an option for initial purchasers to buy an additional $250 million in notes within two weeks of the initial issuance. Notably, the notes are exclusively available to qualified institutional buyers.

The company did not explicitly state that the proceeds from this offering would be used to fund additional Bitcoin purchases. However, it did mention that the funds would be used for investments consistent with GameStop’s investment policy, which includes potential acquisitions. In March, GameStop updated its investment policy to include Bitcoin as a Treasury Reserve Asset, reflecting a broader trend among companies turning to Bitcoin to safeguard cash reserves or reposition themselves as Bitcoin acquisition vehicles.

GameStop recently completed an initial offering of convertible senior notes in early April, raising $1.5 billion with net proceeds of $1.48 billion. Part of these proceeds was used to purchase 4,710 Bitcoin, worth $513 million at the time. This acquisition positions GameStop as the 13th largest corporate Bitcoin holder. However, since announcing its plans to accumulate Bitcoin in March, GameStop’s shares have declined by over 9% from $28.36.

The latest debt offering comes on the heels of GameStop’s first-quarter earnings report, which showed a 17% year-over-year decline in revenue to $732.4 million, down from $881.8 million a year ago. Following the release of the earnings report, GameStop’s stock fell more than 5% during Wednesday’s trading session and an additional 10% in after-hours trading.

GameStop’s move to adopt Bitcoin as a treasury reserve asset is part of a growing trend among companies seeking to diversify their cash reserves and potentially benefit from the appreciation of Bitcoin. The company’s strategy of investing in Bitcoin aligns with its broader efforts to innovate and adapt in a rapidly changing retail landscape. However, the success of this strategy remains to be seen, as the company continues to face challenges in its core business operations.