GameStop Seeks $1.3B In Convertible Debt To Buy Bitcoin, Shares Drop But Retail Investors Unfazed

nvestors, who expect the Bitcoin reserves to link GameStop stock to the crypto asset's price and potentially boost shares, pushed GME shares 12% higher. However, the rally did not hold.

GameStop Corp (GME) shares dropped 8% in Wednesday’s after-market trading, erasing some of the gains from the regular session, after the company announced it would raise $1.3 billion from convertible debt to buy Bitcoin.

GameStop announced a day prior that its board had approved the future purchases of the cryptocurrency as a treasury asset.

Investors, who expect the Bitcoin reserves to link GameStop stock to the crypto asset's price and potentially boost shares, pushed GME shares 12% higher. However, the rally did not hold. 

The video-game retailer will issue convertible senior notes to fund the purchase of Bitcoin, among other initiatives.

Convertible senior notes are debt securities that can be partially converted to equity at a later date.

The raise would add to GameStop's $4.8 billion cash reserves.

GameStop is the latest public company to issue convertible debt to purchase Bitcoin. 

The tactic was first popularized by Strategy, the software firm formerly known as MicroStrategy, which has accumulated over $40 billion in Bitcoin and experienced a significant rise in its stock value.

On Stocktwits, GME was the third most-trending ticker as of Wednesday evening. Retail sentiment jumped higher in the 'extremely bullish' territory, with extremely high 'message volume'.

One user lauded the company's "brilliant" strategy. "They don’t owe anything until 2030 — and when they do, they can pay in: Cash, Stock or Cash equivalent (Bitcoin).”

GME shares closed at $28.36 on Wednesday, down 9.5% year to date.

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