Source: Cointelegraph Original: "{title}"
Video game retailer GameStop has completed a convertible debt issuance, raising $1.5 billion, part of which will be used to purchase Bitcoin.
The issuance was initially planned to raise at least $1.3 billion, but buyers opted for an additional $200 million in debt principal, GameStop stated in a filing submitted to the U.S. Securities and Exchange Commission (SEC) on April 1.
GameStop added, "The company expects to use the net proceeds from the issuance for general corporate purposes, including acquiring Bitcoin in a manner consistent with the company's investment policy."
These convertible notes are debt that can later be converted into equity, set to mature on April 1, 2030, unless converted, redeemed, or repurchased early.
According to the filing, the initial conversion rate for the notes is 33 shares of common stock for every $1,000 in principal.
After the completion of the convertible debt issuance, GameStop's stock price did not show significant fluctuations. According to Google Finance, GME closed up 1.34% on April 1, at $22.61, and rose only 0.5% in after-hours trading.
After announcing the completion of the convertible bond issuance, GameStop's stock price remained relatively unchanged. Source: Google Finance
Positive shareholder sentiment led to a nearly 12% surge in GameStop's stock price on March 26, the day after GameStop announced its Bitcoin plans, reaching $28.36, but the following day the stock price reversed, with GME shares dropping nearly 24% to $21.68.
Analysts at the time indicated that this lukewarm response reflected shareholders' concerns about deeper issues with GameStop's business model.
GameStop Joins the Growing Trend of Bitcoin Investment
On March 25, GameStop confirmed that its board had approved the use of convertible notes and cash reserves to invest in Bitcoin and dollar-pegged stablecoins. According to its Q4 2024 financial report, as of February 1, its cash reserves stood at $4.77 billion, up from $921.7 million a year earlier.
In the wave of public companies building Bitcoin asset portfolios, GameStop is relatively late to join. Many other companies have already added Bitcoin to their balance sheets, a strategy driven and widely promoted by Micheal Saylor.
The video game retailer had previously entered the crypto space by launching a crypto wallet for users, but the wallet was ultimately shut down in November 2023 due to regulatory uncertainty.
GameStop is also seen as the first example of the success of "meme stocks," with its stock price soaring over 1000% in a month during a "short squeeze" in 2021, as traders fought back against hedge funds profiting from shorting the company.
Related: Tether increases its Bitcoin holdings by 8,888 in the first quarter, total holdings exceed $8.4 billion.
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