GameStop's Stock Decline Follows New Debt Offering and Bitcoin Strategy

According to Cointelegraph, GameStop's shares experienced a significant decline, dropping 11.7% in after-hours trading following the announcement of a $1.75 billion private convertible senior note offering. This move extends the company's debt financing strategy, which could potentially support further Bitcoin acquisitions. Earlier, during regular trading hours, GameStop's stock had already decreased by 5.34% to $28.55 after the company reported a 17% drop in first-quarter revenue. The U.S. video game and consumer electronics retailer has not explicitly stated that the proceeds from the offering will be used for additional Bitcoin purchases. However, GameStop has indicated that it plans to invest in accordance with its investment policy, which may include potential acquisitions. Previously, part of GameStop's $1.5 billion raised through convertible notes was used to acquire 4,710 Bitcoin, valued at $513 million at the time of purchase on May 28. This acquisition positions GameStop as the 13th largest corporate Bitcoin holder, according to data from BitcoinTreasuries.NET. The newly announced $1.75 billion private offering features a 0% interest rate, with the convertible senior notes set to mature on June 15, 2032. Additionally, the offering includes an option for initial purchasers to acquire an extra $250 million in notes. These notes can be converted into cash, GameStop stock, or a combination of both, depending on the company's decision. This financial maneuver comes as GameStop reported a $44.8 million profit in the first quarter, a reversal from a $32.3 million loss in the same period of 2024. Despite this profit, the company's revenues fell by 17% to $732.4 million, missing industry expectations and contributing to the stock's decline in after-hours trading on June 10. Since GameStop's initial Bitcoin purchase on May 28, its shares have fallen by 18.5%, according to Google Finance. Including the recent 11.7% drop in after-hours trading, GameStop has now erased all the gains it achieved since March 25, when it first announced its plans to invest in Bitcoin. This stock movement contrasts with the trend observed in most public companies, which have typically seen their share prices rise following announcements of Bitcoin purchases or intentions to do so.