GameStop stock unraveled Thursday after the company late Wednesday announced plans to raise $1.3 billion to buy bitcoin. Shares of the video game retailer had spiked during Wednesday trade on Q4 earnings and plans to add the cryptocurrency as a treasury reserve asset.
GameStop late Tuesday reported earnings of 30 cents per share, to beat FactSet expectations for 8 cents. Revenue fell 28% to $1.28 billion, missing views for $1.48 billion.
Cash, cash equivalents and marketable securities stood at $4.775 billion at the end of the quarter. GameStop also completed the divestiture of its Italy operations and wound-down store operations in Germany.
Bring On Bitcoin
In a separate announcement Tuesday, GameStop said that its board unanimously approved an update to its investment policy to add bitcoin as a treasury reserve asset. The company did not set a maximum amount of bitcoin it may accumulate, and said it may sell any bitcoin it acquires, according to the 10-K SEC filing.
GameStop's investment committee, which was first approved in December 2023, includes Chairman and CEO Ryan Cohen, two independent members of the board, and advisors the investment committee chooses. The filing said the goal of the investment policy is to "provide sufficient liquidity to meet the day-to-day financial obligations of the company, and to optimize investment returns."
GameStop noted that Cohen and other committee members may invest in the same securities that the company invests in. The board believes such investment aligns the interests of GameStop and the investment committee, because it puts the directors' own personal finances at the same risk.
With the announcement, GameStop joins the likes of Strategy, Coinbase and Tesla that have purchased bitcoin as investment instruments.
Late Wednesday, GameStop announced plans to raise $1.3 billion in a private, convertible note offering. Initial purchasers will have the option to purchase up to an additional $200 million of the notes within 13 days of the issuing date.
GameStop said it plans to use the proceeds to fund general corporate purposes, including the acquisition of bitcoin.
GameStop Stock Rallies Early
GME stock rallied 11.8% Wednesday to rebound above its 50-day line. However, shares tumbled 22% during Thursday trade.
Wednesday's gain marked GameStop's best day since June 13, 2024, when shares gained 14.4%. However, GME stock is down almost 30% this year after Thursday's action.
Meanwhile, bitcoin traded around $87,000 late Thursday. The cryptocurrency is up 3.2% over the past week.
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