GameStop Adds BTC to Reserves and Plans to Raise $1.3 Billion to Purchase Bitcoin

GameStop, the popular video game retailer, has taken a bold step in its investment strategy by adding Bitcoin to its treasury reserves. The move marks a significant shift in the company's financial approach, signaling its intention to embrace digital assets as part of its corporate strategy.

Strategic Investment in Bitcoin

On Tuesday, GameStop announced that its board of directors had unanimously approved an update to the company's investment policy, allowing the acquisition of Bitcoin as a treasury reserve asset. The decision was disclosed in a 10-K filing with the U.S. Securities and Exchange Commission (SEC), where the company outlined its intent to invest in certain cryptocurrencies, including Bitcoin and dollar-pegged stablecoins.

The filing also indicated that the investment policy aims to ensure sufficient liquidity to meet day-to-day financial obligations while optimizing investment returns. The policy does not set a cap on the amount of Bitcoin GameStop may acquire, giving the company flexibility in accumulating digital assets. Additionally, GameStop retains the option to liquidate its Bitcoin holdings when necessary.

Ryan Cohen, GameStop's Chairman and CEO, leads the investment committee alongside two independent board members and additional advisors. The committee, first approved in December 2023, aims to align investment interests between the company's finances and the personal investments of its directors, fostering a shared sense of financial risk and reward.

$1.3 Billion Private Convertible Note Offering

In a related development, GameStop announced plans to raise $1.3 billion through a private convertible note offering. This initiative aims to fund general corporate purposes, including the acquisition of Bitcoin. Initial purchasers will also have the option to buy an additional $200 million in notes within 13 days of the issuance date.

The decision to raise capital comes after GameStop reported earnings of 30 cents per share for the last quarter, significantly beating FactSet‘s expectations of 8 cents per share. However, the company’s revenue fell by 28% to $1.28 billion, missing estimates of $1.48 billion. Cash reserves stood at $4.775 billion by the end of the quarter, providing a solid financial cushion.

Market Reactions and Stock Performance

The announcement sparked significant volatility in GameStop's stock price. Shares jumped 11.8% on Wednesday, marking their best performance since June 13, 2024, when they rallied 14.4%. However, the stock later fell nearly 8% in after-hours trading. Despite the temporary surge, GameStop shares remain down about 19% for the year.

The companys decision to add Bitcoin to its reserves has drawn comparisons to other major companies that have invested in digital assets, including MicroStrategy (MSTR), Coinbase (COIN), and Tesla (TSLA). This strategic move aligns GameStop with a growing number of corporations seeking to diversify their treasury holdings through cryptocurrency investments.

Conclusion

GameStops decision to add Bitcoin to its reserves and raise $1.3 billion signals a strategic shift toward embracing digital assets as part of its financial future. While the move introduces certain risks, it also positions the company to potentially benefit from the growing adoption of cryptocurrencies.