GameStop (GME) to Buy the Dip, Raises $1.3 Billion in Convertible Notes to Purchase Bitcoin

Shares of the videogame retailer and notorious meme stock fell 6% in extended trading after ending the day up 12% as investors digest its cryptocurrency plans and equity raise.

GameStop (NYSE:GME) is planning to sell $1.3 billion worth of convertible senior notes in a private offering, with the proceeds set to be used for general corporate purposes, which may include the acquisition of Bitcoin (BTC).

The videogame retailer's shares fell 6% in extended trading on Wednesday after rising 12% in the regular session as investors react to its cryptocurrency plans and equity raise.

Earlier this month, GameStop disclosed that its board of directors had approved the acquisition of BTC as part of its broader strategy to improve the company's balance sheet and generate shareholder value.

For the quarter ended February 1, GameStop reported net sales of $1.28 billion, decreasing by 28% year-over-year and missing the analysts' estimate of $1.48 billion, according to TipRanks. However, EPS came in at $0.29, exceeding the $0.08 anticipated by the market.

At present, GameStop operates 3,203 stores in the U.S., Canada, Australia, New Zealand, and France.

The plan to buy Bitcoin takes inspiration from MicroStrategy (NASDAQ:MSTR), the world's largest corporate holder of the cryptocurrency.

GameStop's venture into crypto marks the latest attempt by the company to turn around its struggling business. In recent years, GameStop has focused on cutting costs and streamlining operations to strengthen its operations.

The company's brick-and-mortar retail business has faced pressure from the shift to buying video games online and digital downloads.

Bitcoin, the flagship cryptocurrency, has been highly volatile in recent times. After reaching a peak of $109,000 in January, its price has decreased to $87,000.

Only one analyst currently provides coverage of GME stock, with a Buy rating and a price target of $31.80, as indicated by InvestingPro.

To assess Bitcoin's performance, we can examine its three-month performance. As shown in the chart below, BTC has experienced a decline of 6.32% over the past 12 weeks.

BTC has encountered difficulties maintaining support above the $90,000 level, which could be attributed to the recent volatility in the broader market.

An intermediate-term technical indicator, the Relative Strength Index (RSI), is currently at 40.58, indicating that the cryptocurrency is in the oversold territory. This suggests that the downward price movement may be slowing down, and a potential reversal could be on the horizon.

However, it's important to note that the Simple Moving Average (SMA) over the past 50 days is still trading above the SMA over the past 200 days, which could be a bearish indication for the intermediate term.

Overall, the technical analysis provides mixed signals for the short-term outlook on BTC. While the oversold RSI and slowing momentum suggest a potential bottom, the SMA indicator and lack of buying pressure at higher levels suggest that further declines are possible.

Finally, it's worth mentioning that Bitcoin has recovered significantly since March 7, when it hit lows of $80,000. This recovery could be attributed to the crypto's strong correlation with the stock market, which has seen a rebound in recent weeks. As a result, BTC could continue to see gains in the short term, especially if the large-cap U.S. stocks maintain their positive momentum.

However, if the stock market stalls and major indices such as the S&P 500 and Dow Jones Industrial Average begin to show signs of a reversal, it could put pressure on BTC to continue trading lower.

In the coming weeks, it will be interesting to observe whether BTC can break through the crucial resistance level of $90,000 and sustain gains above that point. If it does, it could pave the way for a move toward the next major resistance level, which is the all-time high of $109,000.

On the other hand, if BTC fails to overcome the resistance at $90,000 and continues to decline, it could open the door for further technical analysis to identify the next potential support levels.

As always, it's crucial to conduct thorough research and consider multiple perspectives before making any investment decisions.

output: GameStop (NYSE:GME) is planning to sell $1.3 billion of convertible senior notes in a private offering, the net proceeds of which it intends to use for general corporate purposes, which may include the acquisition of Bitcoin (BTC).

The videogame retailer's shares fell 6% in the after-hours trading on Wednesday after a 12% surge in the regular session as investors react to its cryptocurrency plans and equity raise.

Earlier this month, GameStop said its board of directors had approved the acquisition of BTC as part of its broader strategy to