GameStop Stock Drops 11.7% After $1.75 Billion Note Offering

GameStop's stock experienced a significant decline of 11.7% in after-hours trading following the announcement of a $1.75 billion private convertible senior note offering. This move is part of the company's ongoing debt financing strategy, which could potentially fund additional Bitcoin purchases. The news comes on the heels of a 5.34% drop in GameStop's share price during regular trading hours on Wednesday, closing at $28.55. This decline was triggered by the company's reported 17% decrease in first-quarter revenue, announced in after-hours trading the previous day.

GameStop, a prominent US video game and consumer electronics retailer, has been actively investing in Bitcoin. Although the company did not explicitly state that the proceeds from the new debt offering would be used for further Bitcoin purchases, it indicated that the funds would be invested in line with its existing investment policy and potential acquisitions. Notably, a portion of GameStop's recent $1.5 billion raise through convertible notes was used to purchase 4,710 Bitcoin, valued at $513 million at the time of acquisition on May 28. This investment positions GameStop as the 13th largest corporate Bitcoin holder.

The $1.75 billion private offering features a 0% interest rate, with the convertible senior notes maturing on June 15, 2032. The offering also includes an option for initial purchasers to buy an additional $250 million in notes. These notes can be converted into cash, GameStop stock, or a combination of both, depending on the company's decision.

The latest debt offering comes as GameStop reported a $44.8 million profit in the first quarter, reversing a $32.3 million loss from the same period last year. However, the company's revenues fell 17% to $732.4 million, missing industry expectations and leading to a notable drop in after-hours trading on June 10. Since GameStop's first Bitcoin purchase on May 28, its shares have fallen 18.5%. Including the 11.7% decline in after-hours trading, GameStop has erased all the gains it made since March 25, when it first announced plans to invest in Bitcoin. This contrasts with most public companies that have seen their share prices rise after announcing Bitcoin purchases or plans to do so.