GameStop (GME) Coin Tanks 94% After Mirroring the Firm's Bitcoin BTC/USD Treasury Strategy

A cryptocurrency named after GameStop Corp. GME, which jumped more than fivefold due to the firm's Bitcoin BTC/USD treasury strategy, dramatically reversed course on Wednesday.

GameStop (NYSE:GME) shares dropped more than 7% in extended trading on Wednesday after the company announced a $1.3 billion convertible debt offering.

What Happened: GameStop said it is offering 1.3 billion in convertible senior notes due 2030. The notes will be sold in a private offering to a group of institutional investors.

The offering price per note and the aggregate principal amount of the notes to be sold will be determined by further negotiations between GameStop and the initial purchasers.

The video game retailer’s shares fell 7.62% to $26.01 in after-hours trading.

The offering will allow investors to convert the bonds into a predetermined number of GameStop shares on or after April 1, 2030, or when the trading price of GameStop shares reaches a pre-set rate.

This conversion feature could potentially dilute the value of existing shareholders’ equity.

Earlier this week, GameStop received approval to adopt Bitcoin (CRYPTO: BTC) as a treasury reserve asset and will support the purchases using cash, future debt and equity issuances, the company disclosed in a recent filing.

It is planning to invest up to $500 million over the next twelve months in bitcoin, and any holding in excess of $250 million will be reported in its quarterly statements.

What’s More: GameStop shares closed 11.7% higher at $28.36 during Wednesday’s regular session, according to Benzinga Pro.

The stock demonstrated high momentum—a measure of a stock’s relative strength based on its price movement patterns and volatility—as of this writing. Visit Benzinga’s Edge Rankings score to identify stocks with a higher momentum score.

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