- GameStop shares fell 22% after the company announced a $1.75 billion convertible bond offering.
- The funds from these bonds will be used for general corporate purposes and potential investments.
- Despite a recent Bitcoin purchase, GameStop did not confirm further cryptocurrency plans in its announcement.
- CEO Ryan Cohen stated the company is acting independently and will not signal future Bitcoin purchases.
- Some investors and industry experts are concerned about GameStop’s lack of transparency regarding its crypto activity.
GameStop announced on Wednesday it will offer $1.75 billion in convertible senior notes, resulting in a 22% drop in its stock price to $22.12 by midday Thursday. The company, headquartered in Grapevine, Texas, will use the proceeds for general purposes, potential investments following its policy, and acquisitions.
The convertible bonds, a type of corporate debt that can be turned into shares, will not have regular interest. According to a company blog post, the new funds add to another $1.5 billion that GameStop raised in a similar way in April.
Last month, GameStop bought 4,710 units of Bitcoin, but its latest announcement did not comment on any cryptocurrency moves. The firm has previously held other digital assets, such as during efforts tied to its NFT (non-fungible token) marketplace. GameStop’s stock had been trading near $25.40 in late March when the company signaled it might use Bitcoin and other cryptocurrencies as part of its reserve assets after updating its investment policy.
CEO Ryan Cohen told investors the company would not follow others’ strategies or telegraph its future Bitcoin plans. In a recent interview, Cohen said “we’re not following anyone else’s strategy.” The company’s messaging about its Bitcoin purchases has been limited; a one-sentence press release in May did not specify how much GameStop paid for its Bitcoin or other details.
Industry voices have raised concerns. Matt Cole, CEO of Strive, told Decrypt that “transparency and authenticity” are key for a Bitcoin treasury company, and so far, they’ve been a black box. As of May, GameStop reported $6.3 billion in cash and cash equivalents, according to its latest earnings results.
GameStop rose to prominence as the world’s first meme stock during a retail investor-driven short squeeze in 2021. The company remains notable among investors, with figures like Keith Gill (“Roaring Kitty”) playing a key role in its recent stock market history.
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