GameStop invests $1.3 billion in Bitcoin: A bold step into the world of cryptocurrencies

GameStop invests $1.3 billion in Bitcoin: A bold step into the world of cryptocurrencies

GameStop plans to invest $1.3 billion in Bitcoin

In a surprising twist, video game retailer GameStop plans to convert $1.3 billion of its reserves into Bitcoin (BTC). This decision was made by a unanimous vote of the board and could net GameStop between 14,723 and 15,140 BTC based on current Bitcoin prices.

Buying Bitcoin through GameStop

On Tuesday, GameStop announced that there is no set cap on the amount of Bitcoin that can be purchased. The $1.3 billion amount could allow the firm to hoard a significant amount of Bitcoin, considering recent price fluctuations. Recent Bitcoin prices were between $85,861.46 and $88,292.16 in the 24 hours prior to the announcement.

Following MicroStrategy's strategy, GameStop plans to raise funds for Bitcoin purchases by issuing 0% convertible bonds (senior notes). These bonds are sold through a private offering to institutional buyers and are classified as unsecured liabilities of the Company. The bonds mature on April 1, 2030 unless converted, repurchased or redeemed.

Last month, GameStop increased its cash reserves to $4.77 billion. This total represents a significant increase compared to the $921.7 million reported in February 2024. The planned Bitcoin allocation would therefore currently represent 27.25% of the company's cash reserves.

Review of the GameStop Short Squeeze

The company, which was founded in 1980, experienced a significant decline in sales in the late 2010s as more customers switched to online shopping. Poor investment decisions, such as entering the smartphone trade, exacerbated the situation.

In a remarkable event, the Reddit community “Wallstreetbets” discovered that the short selling percentage in GameStop was over 100%. This information led to a powerful wave of buying that triggered the so-called “short squeeze” and catapulted the stock price to over $500 per share.

This event went down in history as the “GameStop Short Squeeze” and even inspired a movie called “Dumb Money” released in 2023. Although the film, which starred prominent actors such as Paul Dano and Shailene Woodley, flopped at the box office, it increased public interest in the story of GameStop and the power of retail investors.

Today, GameStop has a market cap of $12.671 billion, and shares were valued at $28.36 apiece as of Wednesday's trading time. This rise of the company highlights the growing importance and influence of retail investors in the market, forcing institutional investors to rethink their strategies.