GameStop reported raising an additional $450 million through convertible note sales, increasing its total fundraising to $2.7 billion in two months. While the company continues to expand its collectibles business, its financial results raise questions among analysts.
GameStop's Funding through Convertible Notes
GameStop raised $450 million by issuing zero-coupon convertible senior notes. This follows $2.25 billion raised through a private placement last month. The notes are due in 2032 and can be converted to GameStop Class A shares at $28.91 each. These actions were documented in an official filing to the U.S. Securities and Exchange Commission.
Bitcoin Acquisition Strategy
GameStop began acquiring Bitcoin in May, purchasing 4,710 coins for approximately $500 million. The company’s strategy mirrors that of Michael Saylor's firm, Strategy. CEO Ryan Cohen stated that investing in Bitcoin could protect against macroeconomic risks due to its fixed supply and decentralized structure.
Revenue Decline and Collectibles Growth
On the same day GameStop announced the note sale, it reported a 17% drop in revenue for the first quarter to $732.4 million. However, collectibles revenue surged 54%, largely driven by Pokémon card sales. Despite success in collectibles, analysts like Michael Pachter express skepticism regarding the sustainability of this strategy, describing it as appealing to 'greater fools.'
Despite efforts to diversify through Bitcoin acquisitions and expanding its collectibles business, GameStop faces significant challenges in its core operations. The total amount raised has reached $2.7 billion, yet the viability of their current strategy remains in question.
