GameStop's Stock Dives 25% Intraday Following $1.3B Bitcoin Investment Announcement

GameStop's stock underwent a drop of over 25% during the day on Thursday.

This decline came after the announcement of a strategic shift, which includes the issuance of $1.3 billion in convertible bonds to fund the purchase of Bitcoin (BTC).

The video game retailer intends to offer these 0% convertible senior notes, with maturity in 2030, through a private sale.

The profits are meant for general corporate purposes, including the acquisition of Bitcoin, as part of a revised investment policy approved by the company's board earlier this week.

GameStop shares surged over 14% in yesterday's aftermarket hours but opened the day at $25.78 per share and dropped to a low of $21.16 per share during the day.

Bitcoin as a corporate reserve

This decision places GameStop in line with other corporations like MicroStrategy, which have incorporated Bitcoin into their treasury reserves. However, the timing and implementation have raised doubts among investors and analysts.

Bret Kenwell, a U.S. investment analyst at eToro, expressed uncertainty about the company's direction, stating, "There are question marks with GameStop’s model. If bitcoin is going to be the pivot, where does that leave everything else?"

The announcement also mentioned plans to shut down a considerable number of additional stores this year, indicating ongoing struggles in GameStop's core retail operations. This has further sparked investor skepticism about the company's long-term viability and strategic focus.