GameStop's Bitcoin Strategy Draws Skepticism Amid $1.75B Debt Offering

by Murtuza J Merchant Benzinga Staff Writer

Zinger Key Points

Bitcoin ETFs offer simpler exposure for investors, undermining the appeal of firms raising funds to buy crypto.
Without a plan to revive revenue, analysts warn GameStop risks distracting investors from worsening fundamentals.
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GameStop's GME stock took a sharp hit on Thursday, falling 22% to $22.12 by midday Eastern Time, following the announcement that it plans to issue $1.75 billion in convertible senior notes.

What Happened: The notes, which won't carry regular interest, are aimed at "general corporate purposes," according to the company's blog post.

While GameStop didn't explicitly mention Bitcoin BTC/USD in the announcement, the phrasing referenced potential investments "consistent with its investment policy" language similar to what the company used earlier this year when it updated its policy to allow for crypto assets.

The company previously disclosed in late May that it had acquired 4,710 Bitcoin, though the announcement offered little detail.

It gave no information on average purchase price or how much cash was deployed, deviating from the transparency typically seen in corporate Bitcoin disclosures.

That minimal communication has left analysts and investors guessing about the scope and intent of its crypto involvement.

CEO Ryan Cohen has remained tight-lipped on the firm's future Bitcoin plans, stating in a recent interview that GameStop would not follow the playbook of other crypto-invested firms.

Despite posing for a photo earlier this year with Michael Saylor, the Executive Chairman of Bitcoin-heavy Strategy, Cohen insisted the company is pursuing its own path.

Still, the structure of GameStop's latest fundraising mirrors that of Strategy's well-known approach: raising capital through convertible debt to buy Bitcoin.

Also Read: Over 30% Of Bitcoin Supply Controlled By Centralized Entities: Report

What Experts Are Saying: That similarity has drawn comparisons and criticism from observers who believe GameStop may be chasing short-term investor hype rather than addressing deeper operational challenges.

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Speaking with Benzinga, Tom Bruni, Vice President of Community at Stocktwits, noted that retail traders remain enthusiastic about Bitcoin, but are losing interest in companies trying to mimic direct exposure.

"The underperformance of Strategy MSTR relative to Bitcoin and the lackluster response to copycats like GameStop raising funds to buy Bitcoin is indicative of that," Bruni said.

He added that Bitcoin ETFs and regulated financial products have given investors cleaner, more transparent routes to crypto exposure.

"Although these companies can gain short-term fanfare from this financial engineering tactic, once the conversation returns to business fundamentals, much of those gains (and often more) are given back," Bruni explained.

In GameStop's case, the issue may run deeper than market sentiment.

Bruni argues that the company's continued use of high-profile financial maneuvers, rather than focusing on its declining revenue and stagnating retail operations, reflects a lack of strategic direction under Cohen's leadership.

"For the company to make its core operations profitable, a clear plan to drive revenue growth is necessary," Bruni said. "Instead, Ryan Cohen and his team are taking the easy way out."

While Stocktwits data shows a rise in ‘bullish' sentiment toward GameStop amid the selloff, Bruni noted that many traders view it as a short-term technical setup rather than renewed confidence in the business model.

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