(Bloomberg) — GameStop Corp. is seeking to sell $1.3 billion of convertible bonds to fund Bitcoin purchases as it embraces a strategy that was developed by the cryptocurrency advocate Michael Saylor.
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The video-game retailer rallied after the company said on Tuesday that its board approved a plan to add Bitcoin as a treasury reserve asset. That was followed on Wednesday by a filing announcing the planned sale of the bonds, which will be used for general purposes, including the acquisition of Bitcoin.
The Grapevine, Texas-based GameStop joins a growing list of public companies taking on convertible debt to buy Bitcoin in an attempt to capitalize on upswings in the cryptocurrency. The tactic was pioneered by Saylor’s Strategy, the enterprise software company formally known as MicroStrategy, which has acquired more than $40 billion in Bitcoin and seen its share price soar.
A convertible bond is a hybrid instrument that allows the holder to convert the bond into a predetermined number of shares if the stock rises above a certain level. GameStop is marketing its notes, which are due in 2030, with a 35% to 40% conversion premium, according to people familiar with the deal who asked not to be identified because the information is private. The premium determines the price at which the conversion happens.
GameStop’s entry into the market comes even as investors appear to be growing more skeptical of the strategy. The premium that GameStop is looking to offer on its bonds is less than the roughly 55% premium on a similar issue from Strategy in November. More recently, Strategy made a $2 billion sale in February that offered investors a more advantageous 35% premium. That along, with the terms on a growing slate of debt-like instruments offered by Strategy, suggest that investors are demanding more from the company.
GameStop’s stock fell after the filing was released on Wednesday, erasing some of the gains from earlier in the day. The shares were down 6.6% to $26.44 as of 5:30 p.m. New York time in after-market trading.
A spokesperson for GameStop didn’t immediately respond to a request for comment.
GameStop’s push to quickly ramp up its Bitcoin purchases comes against a starkly different backdrop than when Strategy and other copycats flooded the market at the end of 2024. The cryptocurrency is down roughly 18% from an all-time high in January and investors are bailing on a variety of risky assets amid tariff uncertainty and choppy economic data.
