GameStop’s $1.3 Billion Bet on Bitcoin: Will the Gamble Pay Off?
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GameStop’s $1.3 Billion Bet on Bitcoin: Will the Gamble Pay Off?
Once, it disrupted Wall Street with a soaring stock price; now, it's betting on Bitcoin to drive a new growth engine.
Navigating Web3 tides with focused insightsBy Fairy, ChainCatcher
Yesterday, GameStop officially announced it will add Bitcoin to its corporate treasury reserves, becoming the latest publicly traded company to enter the cryptocurrency space. The veteran game retailer is attempting to follow Strategy's successful playbook, seeking a breakthrough as its traditional business struggles to grow.
From "king of retail investors" to "crypto believer," can GameStop’s transformation bring about a new lease on life?
GameStop’s Troubled Transformation
In Q4 2024, GameStop saw an increase in net income, but its net sales declined by $511 million year-on-year, and it closed 590 U.S. stores within a single year. Wedbush analyst Michael Pachter downgraded GameStop to “underperform” with a $10 price target, reflecting his bearish outlook.
At its core, GameStop’s problem lies in a business model that is gradually being phased out by the market. As a traditional retailer dependent on physical stores for selling video game hardware, software, and merchandise, it has been marginalized by the rise of digital game downloads and e-commerce platforms. Faced with declining sales and shrinking store footprint, GameStop has been forced onto a radical and uncertain path of transformation.
Over the past few years, GameStop has repeatedly attempted to reinvent itself—expanding e-commerce, adjusting investment strategies, and entering the NFT space with its own NFT marketplace and digital asset wallet. As Pachter put it bluntly: “GameStop has changed its strategy about six times over the last three years.” The company has been desperately searching for a new way forward.
Now, GameStop is placing its biggest bet yet—on Bitcoin. This new gamble may ultimately determine its fate.
Mimicking Strategy: A $1.3 Billion Bond Bet on Bitcoin
GameStop is emulating Strategy’s iconic move—raising capital through convertible bonds to purchase Bitcoin.
The company plans to privately place $1.3 billion in 0.00% senior convertible notes due in 2030. To further attract investors, GameStop has granted initial purchasers a 13-day option to buy up to an additional $200 million in notes.
These notes constitute unsecured debt obligations of GameStop, carry no periodic interest, and do not accrue principal growth. Investors may choose to convert the notes into cash, Class A common stock of GameStop, or a combination of both prior to maturity—the form of settlement at GameStop’s discretion.
In regulatory filings, GameStop explicitly stated that its investment policy permits allocations to certain crypto assets, including Bitcoin and U.S. dollar stablecoins. Furthermore, the company disclosed it may use proceeds from cash, debt, or equity financing to invest in Bitcoin, without setting any upper limit on Bitcoin holdings—and may also sell its Bitcoin holdings in the future.
As of February 1, GameStop held $4.77 billion in cash reserves, giving it ample room to execute this strategic investment. The cross-sector experiment combining “meme stocks” and cryptocurrency has officially begun.
Good for Crypto, But Not Necessarily for GameStop?
Following the announcement, GameStop’s stock rose 11.65% during regular trading hours, only to fall 7.40% after hours compared to its closing price. While the move injected fresh excitement into the crypto market, investors remain divided on whether this transformation bodes well for GameStop’s long-term prospects.
Since Strategy began buying Bitcoin in 2020, its share price has surged 23-fold. However, replicating that success at GameStop remains highly uncertain.
Wedbush analyst Michael Pachter noted: “The issue is, Strategy currently trades at about twice the value of its Bitcoin holdings. If GameStop were to spend all $4.6 billion of its cash on Bitcoin and then trade at two times its Bitcoin holdings, its stock price would actually drop by $5.”
Market observers have offered even more direct criticism:
Community member @KabraxFX commented: “This means GME hasn’t found an effective way to utilize its massive cash pile to grow the business. In my view, this is bearish.”
Investor @MonkEchevarria said: “GameStop’s move is certainly interesting, but Bitcoin won’t fix its weak fundamentals. An earnings beat is nice, but it doesn’t change the reality of stagnant growth and weak cash flow. Price does not equal value, and hype does not equal strategy. From a three-year-plus perspective, this looks more like a desperate pivot than a genuine transformation.”
Some have even joked that GameStop is now essentially a hedge fund.
GameStop’s story continues to unfold amid disruption and controversy. Bitcoin may add a bright spot to its balance sheet, but it may not solve the underlying challenges in its core business.
In this ever-evolving narrative, the only certainty is uncertainty itself.
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