GameStop, the retail giant turned crypto enthusiast, has raised an additional $450 million through a follow-on sale of zero-coupon convertible senior notes. This brings its total fundraising to an impressive $2.7 billion in less than two weeks. Notably, GameStop raises $450M as it aims to strengthen its Bitcoin-heavy balance sheet. This latest move underscores the company’s commitment to building a Bitcoin-heavy balance sheet while navigating a rapidly evolving retail and digital landscape.
Breaking Down the $2.7 Billion Fundraising
The disclosure came via a filing with the U.S. Securities and Exchange Commission (SEC) on Tuesday. This second tranche follows the initial $2.25 billion raised last month through a private placement. The recent $450 million stems from a 13-day option granted to the original buyers, which was exercised in full. GameStop is continually reshaping its financial strategy as GameStop raises $450M in convertible senior notes.
The convertible senior notes, due in 2032, can be exchanged for GameStop Class A shares at a conversion rate of $28.91 per share —a 32.5% premium over the stock’s volume-weighted average price as of June 12, the day the first offering launched.
GameStop stated that the funds will be used for “general business purposes” and “investments consistent with GameStop’s Investment Policy,” which explicitly includes acquiring Bitcoin for its balance sheet.
Following MicroStrategy’s Crypto Playbook
GameStop’s Bitcoin strategy closely mirrors the playbook pioneered by Michael Saylor’s Strategy. In May, GameStop began purchasing Bitcoin, acquiring 4,710 coins for approximately $500 million using proceeds from a $1.3 billion convertible note issued earlier this year.
CEO Ryan Cohen, a close friend of Saylor, has justified the Bitcoin push as a hedge against macroeconomic risks. He highlighted Bitcoin’s fixed supply and decentralized structure as key attributes. These attributes make it an attractive store of value amid global economic uncertainty.
While Cohen’s vision aligns with Saylor’s, not everyone is convinced. Analysts remain skeptical about whether Bitcoin purchases are a prudent use of GameStop’s capital. This is especially true given the company’s declining core business performance.
Revenue Declines and Collectibles Surge
On the same day GameStop disclosed its latest fundraising, the company reported a 17% drop in revenue for the fiscal first quarter. Revenue was down to $732.4 million, reflecting waning foot traffic in physical stores and shifting consumer preferences toward digital gaming.
Despite these challenges, GameStop’s collectibles business has emerged as a bright spot. Revenue from collectibles surged 54% year-over-year, driven largely by sales of Pokémon Trading Cards. According to a survey by Circana, 19% of adults purchased Pokémon cards for themselves in the past six months. Many cited fun or room decoration as their primary motivation.
At the annual shareholder meeting, Cohen emphasized collectibles as a “natural extension” of GameStop’s brand. In this context of transitions, GameStop raises $450M to further invest in its diverse portfolio. He described the segment as having high margins and being deeply rooted in retail—a stark contrast to the declining demand for physical video games.
Wall Street Remains Skeptical
Wall Street analysts have been less than enthusiastic about GameStop’s dual focus on Bitcoin and collectibles. Wedbush analyst Michael Pachter reiterated his “underperform” rating. He stated that the company’s Bitcoin strategy appeals only to “greater fools” willing to pay more than double the value of its assets.
Pachter added that GameStop is already trading at 2.4 times cash, leaving little upside from allocating that cash to Bitcoin. “The strategy makes little sense,” he remarked, reflecting broader skepticism about the long-term viability of GameStop’s pivot.
GameStop’s stock closed at $23.16 on Tuesday, down 0.56% for the day. The market appears to favor companies with cleaner financials and stronger growth prospects, casting doubt on whether Bitcoin and collectibles alone can revive investor confidence.
A Bold but Risky Strategy
With $2.7 billion in its coffers, GameStop is betting big on two unconventional growth avenues: Bitcoin and collectibles. While the former offers potential as a hedge against inflation and macroeconomic instability, the latter taps into a growing adult collector market.
However, questions linger about whether these strategies can offset the steady decline of GameStop’s core retail business. As digital gaming continues to dominate, physical game sales and console demand are unlikely to rebound significantly.
For now, GameStop’s leadership remains optimistic. Cohen’s vision of blending crypto investments with high-margin collectibles represents a bold attempt to reinvent the struggling retailer. Whether this gamble pays off remains to be seen—but one thing is certain: GameStop raises $450M marks a new chapter and is no longer just a gaming company.
