Author: Stephen Katte, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Video game retailer GameStop Corporation (GME) has completed a convertible bond issuance, raising $1.5 billion, with part of the proceeds specifically allocated for purchasing Bitcoin.
**GameStop said in an April 1 filing with the SEC that the offering was initially intended to raise at least $1.3 billion, but purchasers opted to purchase an additional $200 million in bonds. **
"The company expects to use the net proceeds from this offering for general corporate purposes, including the acquisition of Bitcoin in a manner that is consistent with the company's investment policy," GameStop added.
Convertible bonds are a type of debt that can later be converted into equity, maturing on April 1, 2030, unless converted, redeemed, or repurchased early.
According to the document, the conversion rate of the bond was initially set at 33 shares of common stock for every $1,000 of bond principal.
After the issuance of the convertible bonds, GameStop's stock price did not experience significant fluctuations. Google Finance data shows that GME closed up 1.34% to $22.61 on April 1, with a slight increase of only 0.5% after hours.
After announcing the completion of its convertible bond issuance, GameStop's stock price barely changed. Source: Google Finance
Driven by positive shareholder sentiment, on March 26 (the day after GameStop announced its Bitcoin plan), the stock rose nearly 12% to $28.36, but the next day its fortunes reversed, with GME's stock price dropping nearly 24% to $21.68.
At that time, analysts believed that this lukewarm response reflected shareholders' concerns about deeper issues with GameStop's business model.
GameStop Joins the Bitcoin Investment Wave
On March 25, GameStop confirmed that it has received board approval to invest in Bitcoin and dollar-pegged stablecoins using bonds and cash reserves. According to its financial statement for the fourth quarter of 2024, as of February 1, these reserves amounted to $4.77 billion, compared to $921.7 million in the same period last year.
GameStop was relatively late among the publicly listed companies in creating Bitcoin bonds. Many other companies have already added Bitcoin to their balance sheets following Micheal Saylor's strategy.
This video game retailer had previously ventured into the cryptocurrency space by launching a crypto wallet for its users, but due to regulatory uncertainty, the wallet was ultimately closed in November 2023.
GameStop is also considered the first example of a meme stock success, as the stock surged over 1,000% within a month after a short squeeze in 2021, with traders turning the tables on hedge funds that had been profiting from shorting the company.
