GameStop sticks to MicroStrategy’s crypto playbook

GameStop has raised another $450 million through a follow-on sale of zero-coupon convertible senior notes, pushing its total fundraising to $2.7 billion in just under two weeks.

The company made the disclosure in a filing to the US Securities and Exchange Commission on Tuesday. This second chunk was brought in after the initial $2.25 billion raised last month through a private placement.

The notes were offered under a 13-day option that gave the original buyer the right to purchase more, and that option got exercised in full.

The notes are due in 2032 and can be converted into GameStop Class A shares at a rate of $28.91 per share, which is a 32.5% premium compared to the stock’s volume-weighted average price as of June 12—the day the first offering launched.

GameStop says the money is going into general business use and “making investments in a manner consistent with GameStop’s Investment Policy,” which includes buying Bitcoin to hold on the company’s balance sheet.

GameStop sticks to MicroStrategy’s crypto playbook

GameStop started buying Bitcoin in May, picking up 4,710 coins with part of the proceeds from a $1.3 billion convertible note it sold earlier this year. That first round of buying cost around $500 million.

The company is now copying the same strategy that Michael Saylor’s company, Strategy (formerly MicroStrategy), used to build up its massive crypto holdings. Strategy became the biggest corporate owner of Bitcoin by selling equity and issuing debt to keep loading up. That tactic also brought heavy price swings to its stock over the past few years.

Strategy used different types of securities, including convertible debt, to buy Bitcoin. GameStop is now using the same approach. CEO Ryan Cohen told shareholders the move to stack Bitcoin is about macroeconomic risks, and called the asset’s fixed supply and decentralized structure a possible hedge against those risks. Ryan is also close friends with Saylor now, as per their X accounts.

Shares of GameStop were priced at $23.16 as of Tuesday, down 0.56% on the day, continuing to underperform as market focus shifts toward companies with cleaner financials and stronger growth outlooks. The decision to buy Bitcoin hasn’t done much to lift the share price, and now analysts are questioning whether the strategy actually makes sense.

Revenue down, collectibles up, analysts unimpressed

On the same day the company filed details of the second note sale, it also reported a 17% drop in revenue for the fiscal first quarter, down to $732.4 million. Demand for digital games is rising while foot traffic in physical stores continues to slide. GameStop’s core business, retail sales of new and used games and consoles, is still bleeding out slowly.

Wedbush analyst Michael Pachter wasn’t impressed. He reiterated his underperform rating on GameStop, saying the company is just appealing to “greater fools” who are willing to pay more than double the value of the company’s assets.

Pachter added that GameStop is already trading at 2.4 times cash, and sees no upside from using that cash to buy Bitcoin. “The strategy makes little sense,” he said. That’s not exactly glowing support from Wall Street.

Still, Cohen is pushing the company in new directions. At the annual meeting on Thursday, he said GameStop is expanding its collectibles business, calling trading cards a “natural extension” of the brand. He described it as a segment with high margins and said it’s deeply rooted in retail. While games may be going digital, cardboard isn’t.

GameStop said its collectibles revenue jumped 54% in the first quarter compared to last year. Most of that growth came from sales of Pokémon Trading Cards, which are clearly still pulling weight among buyers who aren’t just kids.

A survey from Circana showed that 19% of adults had bought Pokémon cards for themselves within the last six months. Most buyers said they’re collecting them for fun or as room decoration. Circana also noted that adults were the biggest spenders across all age groups when it came to toys in the first quarter.

So GameStop is stacking Bitcoin and Pokémon cards. Whether that works out remains to be seen. But for now, the company has $2.7 billion in its pocket, Bitcoin on its balance sheet, and a CEO betting on collectibles and crypto in equal measure.

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