GameStop Corporation, a major video game retailer, has closed its convertible debt offering after raising $1.5 billion, some of which will be used to purchase Bitcoin. Initially, the goal was to amass at least $1.3 billion in funds, but an additional $200 million was included based on the aggregated principal amount of notes. The information was shared in an April 1 filing with the Securities and Exchange Commission.
Convertible notes are debts that can be converted into equity and are anticipated to mature on April 1, 2030, unless decided otherwise. The conversion rate is initially 33 shares of Common Stock for each $1,000 principal amount of notes according to the filing. There was not a large movement in GameStop shares following the closing of the convertible debt offering.
Despite a surge in stock prices by almost 12% to $28.36 on March 26, the day after revealing its plan to invest in Bitcoin, GameStop shares fell almost 24% to $21.68 the following day. The decrease was attributed to shareholders’ fear about deeper problems with GameStop’s business model.
GameStop’s board, on March 25, approved the company’s investment in Bitcoin and U.S. dollar-pegged stablecoins using the notes and its cash reserves, which had reached $4.77 billion by February 1. Since then, GameStop follows the accelerating trend among public entities that have incorporated Bitcoin into their treasuries.
Despite previous ventures into the realm of cryptocurrency, including the creation of a crypto wallet for its users, GameStop remains new to Bitcoin. Their previous endeavor was shut down in November 2023 due to regulatory uncertainty. However, GameStop is recognized as the first example of meme stock success, following a 2021 short squeeze that propelled the stock by more than 1000% in one month.