GameStop (NYSE: GME) Will Invest in Bitcoin as Part of Its New Investment Strategy

GameStop Corp. (NYSE: GME) saw its shares climb 0.3% in pre-market trading on Friday, reaching $22.16, after announcing plans to purchase Bitcoin as part of its newly outlined investment strategy. The surge came following the company's announcement of its $1.3 billion Convertible Senior Notes offering, which is set to mature in 2030.

GameStop Corp (NYSE:GME) shares rose 0.3% to $22.16 in pre-market trading on Friday, extending gains after the company announced plans to buy Bitcoin (BTC/USD) as part of a newly outlined investment strategy.

The video game retailer will offer $1.3 billion of Convertible Senior Notes due 2030, which are being sold primarily to institutional investors, the Grapevine, Texas-based company said. The company also has an option to sell an additional $200 million of the notes within 13 days of issuance, which could increase the offering to $1.48 billion.

The notes, which will not bear interest, can be converted into shares of GameStop common stock at a price of $19 per share until January 1, 2030, after which conversion will remain open until the final trading day before maturity. GameStop may elect to settle conversions in cash, stock or a combination of both.

After deducting fees and estimated offering expenses, GameStop expects to receive approximately $1.28 billion of the net proceeds from the offering, which could increase to about $1.48 billion if the additional notes are sold.

The company plans to use part of the proceeds to purchase Bitcoin as a treasury reserve asset, in line with its new investment strategy. This approach is similar to that of companies like MicroStrategy Inc (NASDAQ:MSTR), which have been investing in Bitcoin as a hedge against inflation and currency depreciation.

Crypto prices have soared 27% since the 2024 US elections, rekindling enthusiasm for Bitcoin as a store of value.

While some retail investors have applauded GameStop's strategy as a forward-thinking financial play, others have expressed concern about the company's long-term focus. They argue that GameStop should prioritize expanding its core business and investing in future endeavors over speculating in cryptocurrency.

"I applaud GameStop for making this move. It's a smart and creative way to manage the company's finances and invest in the future," said one investor on Reddit.

"I'm not surprised that GameStop is investing in Bitcoin. The company has been open about its interest in cryptocurrency and Web3 technologies," another investor added.

However, some investors had mixed feelings about GameStop's Bitcoin purchase.

"I think it's a good move for GameStop to be investing in Bitcoin, but I'm not sure if it's the best use of the company's funds," one investor noted. "The company could be putting the money to better use by investing in its e-commerce business or expanding into new markets."

"I'm a little concerned about the timing of the offering. The stock price has already come down a lot from its highs, so it might be a good time for the company to be selling stock."

GameStop's stock price has fallen significantly since its highs in early 2021, when retail investors on platforms like Reddit drove up the company's valuation to astronomical levels.

The company's stock price is now down about 70% from its all-time high of over $483, set in February 2021, during the peak of the meme stock craze.

At the beginning of this year, the stock price briefly dipped below $50, but it has since recovered to trade around the $20 level.

GameStop is known for its video game consoles, PC games, and gaming merchandise. It operates over 1,000 stores in the US and has a strong online presence. The company's products and services are in high demand, especially during the holiday season.

GameStop has been making bold moves to transform its business and navigate the turbulent economic landscape. The company's pivot toward Bitcoin could be a pivotal moment in its ongoing evolution.