A Gamestop store is seen in Union Square on April 4, 2025 in New York City.
Michael M. Santiago | Getty Images
GameStop shares slid Thursday after the video game retailer announced plans for a $1.75 billion convertible notes offering to potentially fund its new bitcoin purchase strategy. The company also said it would turn its focus toward the trading card market.
The retailer said it intends to use the net proceeds from the note offering for general corporate purposes, “including making investments in a manner consistent with GameStop’s Investment Policy and potential acquisitions.”
Part of the investment policy is to add cryptocurrencies to its balance sheet. Last month, GameStop bought 4,710 bitcoins, worth more than half a billion dollars.
The stock tanked more than 23% in afternoon trading.
GameStop
GameStop is following in the footsteps of software company MicroStrategy, now known as Strategy, which bought billions of dollars worth of bitcoin in recent years to become the largest corporate holder of the flagship cryptocurrency. That decision prompted a rapid, albeit volatile, rise for Strategy’s stock.
Strategy has issued various forms of securities including convertible debt to fund its bitcoin purchases.
CEO Ryan Cohen recently said GameStop’s decision to buy bitcoin is driven by macro concerns as the digital coin, with its fixed supply and decentralized nature, could serve as protection against certain risks.
The brick-and-mortar retailer reported a decline in fiscal first-quarter revenue on Tuesday as demand for online gaming rose. Its revenue dropped 17% year over year to $732.4 million.
The shares fell 5% on Wednesday after those results. Wall Street appears uncertain the video game retailer can mimic the success of MicroStrategy.
Wedbush analyst Michael Pachter reiterated his underperform rating on GameStop on Wednesday, saying the meme stock has consistently capitalized on “greater fools” willing to pay more than twice its asset value for its shares. The Wedbush analyst believes the bitcoin buying strategy makes little sense as the company, already trading at 2.4 times cash, isn’t likely to drive an even greater premium by converting more cash to crypto.
Separately, Cohen said on Thursday at the company’s annual meeting that GameStop is focusing on trading cards as “a natural extension” of its existing business, according to a transcript on FactSet. He said that this market is embedded in physical retail and has “high margin potential.”
GameStop’s collectibles revenue in the first quarter surged 54% on a year-over-year basis, driven by growing demand for trading cards – in particular, the Pokémon Trading Card Game, the company said.
Data tracker Circana said its March Omnibus survey revealed that 19% of adults have purchased Pokémon trading cards for themselves in the past six months.
The majority are collecting the cards as a hobby or for decoration, Circana said. The firm added that adults have been helping to boost toy sales, with the demographic accounting for the highest spending among all age groups in the first quarter.
—CNBC’s Christina Cheddar Berk contributed reporting.
Correction: GameStop shares fell 5% on Wednesday. An earlier version misstated the percentage.
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