GameStop Loses 25% After Announcement Of Convertible Bonds To Buy Bitcoin. What's Going On?
The sell-off may have been driven by the terms of the convertible bonds, although some believed it reflected investor dissatisfaction with plans to purchase bitcoin.
Christian Sandor, Helen Brown | Edited by Stephen Alpher Updated 27 Mar 2025 18:47 UTC Published 27 Mar 2025 18:42 UTC
Key facts:
- GameStop shares fell 25% on Thursday, erasing all gains since the stock announced plans to buy bitcoin (BTC).
- The company's proposal to issue $1.3 billion in convertible bonds with a 0% coupon rate to finance its Bitcoin purchases initially generated enthusiasm, but upon closer analysis, investor interest began to wane.
- Experts predict that GameStop's stock price will continue to decline until the convertible bonds are issued.
Shares of GameStop (GME), the struggling video game retailer that has become a meme stock, fell 25% on Thursday, erasing all gains since the company announced plans to include Bitcoin (BTC) in its reserve holdings earlier this week.
GME fell to just over $21 in trading, its lowest price since October and down more than 28% from Wednesday's high near $30.
The price action came after the company unveiled plans late Wednesday to issue $1.3 billion in zero-coupon convertible notes to raise funds to buy BTC. After an initial burst of enthusiasm among the crypto community, interest waned on Thursday as investors began to take a closer look at the offering.
“Many existing shareholders are not in favor of this move, so there is a significant amount of switching,” said Louis Liu, chief investment officer at Mimesis Capital, in a statement on X.
The sharp selloff could also be related to the pricing phase of the convertible bonds, as potential bond buyers may sell or short the stock. James Van Straten, senior analyst at CoinDesk, noted that MicroStrategy (MSTR) and Semler Scientific (SMLR) shares also declined during the pricing of their convertible bond offerings.
“We suspect GameStop's share price will decline before the convertible notes are issued, especially given that the convertible investor will receive zero coupon and will have to believe that the GameStop meme phenomenon will continue for another five years,” said Wedbush analyst Michael Pachter, who has an underweight rating on GME.
Pachter claims the company is following Strategy, but MSTR is trading at less than twice the value of its bitcoin, while GME is trading at more than twice its cash holdings.
“We expect this proposal to fail,” Pachter added. “We find it difficult to understand why any investor would be willing to pay more than double the cash value for GameStop’s ability to convert those funds into BTC, especially given that those same investors could invest in BTC or a BTC ETF themselves.”
GME is just the latest Wall Street company to decide to convert some of its cash into bitcoin. The trend started with Strategy, a company led by
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