GameStop shares tank on convertible bond offering to potentially buy more bitcoin

GameStop shares slid connected Thursday aft the video crippled retailer and meme banal announced plans for a $1.75 cardinal convertible notes offering to perchance money its caller bitcoin acquisition strategy.

The institution said it intends to usage the nett proceeds from the offering for wide firm purposes, "including making investments successful a mode accordant with GameStop's Investment Policy and imaginable acquisitions."

Part of the concern argumentation is to add cryptocurrencies connected its equilibrium sheet. Last month, GameStop bought 4,710 bitcoins, worthy much than fractional a cardinal dollars.

The banal tanked much than 15% successful premarket trading pursuing the announcement.

GameStop

GameStop is pursuing successful the footsteps of software institution MicroStrategy, present known as Strategy, which bought billions of dollars worthy of bitcoin successful caller years to go the largest firm holder of the flagship cryptocurrency. That determination prompted a rapid, albeit volatile, emergence for Strategy's stock.

Strategy has issued assorted forms of securities including convertible indebtedness to money its bitcoin purchases.

CEO Ryan Cohen precocious said GameStop's determination to bargain bitcoin is driven by macro concerns arsenic the integer coin, with its fixed proviso and decentralized nature, could service arsenic extortion against definite risks.

The brick-and-mortar retailer reported a decline successful fiscal first-quarter revenue on Tuesday arsenic request for online gaming rose. Its gross dropped 17% year-over-year to $732.4 million. 

The shares fell 6% connected Wednesday aft those results. Wall Street appears uncertain it tin mimic the occurrence of MicroStrategy.

Wedbush expert Michael Pachter reiterated his underperform rating on GameStop Wednesday, saying the meme banal has consistently capitalized connected "greater fools" consenting to wage much than doubly its plus worth for its shares. The Wedbush expert believes the bitcoin buying strategy makes small consciousness arsenic the company, already trading astatine 2.4 times cash, isn't apt to thrust an adjacent greater premium by converting much currency to crypto.