GameStop shares plummeted on Thursday after the video game retailer announced plans to issue $1.75 billion in senior convertible bonds to investors. This is a form of corporate debt that companies purchasing Bitcoin, like Strategy, have utilized to accumulate this asset.
As of noon Eastern Time, shares of the Texas-based company located in Grapevine had dropped 22% to $22.12, according to Yahoo Finance. The shares were trading around $25.40 at the end of March when the company stated it could begin leveraging Bitcoin and other cryptocurrencies as treasury reserve assets after updating its investment policy.
In a blog post, GameStop stated that the proceeds from the convertible bonds, which "will not have regular interest payments," will be used for "general corporate purposes," including investments aligned with the investment policy and buyback transactions, according to a company blog post.
Although GameStop purchased 4,710 Bitcoin last month, the company did not specifically mention Bitcoin in its announcement on Wednesday. The company had also held other cryptocurrencies previously as part of its unsuccessful efforts to establish an NFT market.
GameStop CEO Ryan Cohen hinted at the company's Bitcoin purchases when he was photographed alongside co-founder and Executive Chairman of Strategy, Michael Saylor, earlier this year. However, he stated in a recent interview that the company would not disclose any future Bitcoin purchases, and that they "do not follow the strategy of anyone else."
The way the company has communicated about its Bitcoin-related activities to shareholders has been different from most companies involved in accumulating this asset. When the company disclosed its first Bitcoin purchase at the end of May, the press release was just one sentence long, lacking the average purchase price or details on the amount the company spent on Bitcoin.
Matt Cole, CEO of Strive, told #Decrypt in a recent interview: "What I think is very important for a company holding Bitcoin treasury is transparency and authenticity, and so far, they remain a black box."
Before announcing it would offer $1.75 billion in convertible bonds to investors on Wednesday, the company raised $1.5 billion through a similar offering in early April.
Among those disappointed with GameStop's cryptocurrency experiment, some feel that the company has been too vague about its plans, while seemingly focusing more on maintaining cash reserves. As of May, GameStop held $6.3 billion in cash and cash equivalents, according to their latest earnings report.
Recognized as the first meme stock in the world, GameStop became a phenomenon during the pandemic after its stock price skyrocketed during a historic short squeeze in 2021. Keith Gill, also known as Roaring Kitty, became the face of a movement led by individual investors against Wall Street institutions.