- Video game retailer GameStop said on Tuesday that it will start investing in bitcoin.
- It said it plans to sell $1.3 billion of convertible bonds to buy bitcoin.
- GameStop's stock rose on the bitcoin news but fell on the bond deal.
Video game seller GameStop said it will now include bitcoin in its financial investments, and investors are piling in.
On Wednesday afternoon, GameStop said that it intends to sell $1.3 billion of convertible bonds to fund its purchase of bitcoin, after announcing its board had approved investments in the cryptocurrency.
Convertible bonds allow holders to convert the bonds into a fixed number of shares if the stock rises to a certain price.
GameStop jumped 11.7% in Wednesday trading despite the struggling retailer reporting a fourth-quarter revenue decline of 28%, to $1.28 billion, compared to the same period in 2023. The stock was down 7.4% after hours on Wednesday, after the announcement about the bond sale.
Last month, GameStop gained 10% after CNBC reported that the company was considering investing in bitcoin and other cryptocurrencies using its $4.6 billion cash pile.
GameStop's move echoes the actions of software maker Strategy, which has been stockpiling bitcoin for years. Last week, the company added $10.7 million of the cryptocurrency, adding to its existing $41.6 billion of bitcoin. In early February, GameStop's CEO Ryan Cohen hinted at a similar decision by posting a photo of himself and Strategy cofounder Michael Saylor on X.
GameStop said it has not set a cap on the amount of the cryptocurrency it will hold and said that it can sell any bitcoin it acquires.
Jumping on the bandwagon
The videogame retailer joins a growing list of companies investing in bitcoin. More firms are copying Strategy's playbook, including players outside of the crypto space. Companies including Tesla, Coinbase, Acurx Pharmaceuticals, and Riot Platforms have invested in bitcoin in recent years, and others have considered buying the coin.
With Wall Street gradually embracing bitcoin as a store of value asset, some investors argue that bitcoin makes sense as an asset for companies to hold in their treasuries to hedge inflation. This argument was posed to Microsoft shareholders in December, who ultimately rejected a proposal for the tech titan to buy the crypto.
Others see companies with large bitcoin holdings as a safer proxy to the crypto compared to buying the coin itself.
GameStop's decision comes weeks after President Donald Trump signed an executive order to establish a strategic reserve of cryptocurrencies using tokens already owned by the government.
Bitcoin is up 25% in the past year, boosted by a crypto-friendly US presidential administration. However, it's down about 6% year-to-date amid soaring volatility in risk assets and a waning of the momentum since Trump's election win.
Memestock frenzy
GameStop, which sells physical games and hardware, has been grappling with changes to the video gaming industry as more people shift toward digital downloads and streaming.
Related stories
Business Insider tells the innovative stories you want to know
Business Insider tells the innovative stories you want to know
It was a major winner in the meme stock mania of January 2021, which involved throngs of inexperienced investors using the trading app Robinhood to buy stocks of companies they wanted to support. GameStop's stock has risen over 2,200% in the last five years but is down 19% so far this year.
Robinhood faced backlash for suddenly restricting trading on these meme stocks and for gamifying short-term investing, which critics say poses serious financial risks.
In 2021, Robinhood CEO Vlad Tenev and Wall Street hedge fund managers were questioned in a congressional inquiry into the GameStop trading event. In 2023, a federal judge dismissed the lawsuit, saying that customer agreements allowed Robinhood to limit transactions.
Check out Business Insider's picks for best cryptocurrency exchanges