GameStop's Experiment in Bitcoin Funding Raises More Questions Than Answers

Thursday 27th of March 2025 20:44:57

GameStop slumps as its plan to sell debt to fund Bitcoin purchases raises some questions

GameStop Corp. shares took a hit on Tuesday after the video game retailer announced plans to sell debt to fund its purchase of Bitcoin, sparking concerns about the company's financial strategy.

The company, which has been struggling to adapt to the shift towards digital gaming, revealed that it plans to raise $550 million through a debt offering to fund its Bitcoin investments. The move has raised eyebrows among investors and analysts, who question whether the company's decision to dabble in cryptocurrencies is a sign of desperation or a shrewd business move.

"We're not sure what GameStop is trying to achieve here," said Michael Pachter, an analyst at Wedbush Securities. "Is this a desperate attempt to prop up the stock price, or is there some sort of strategic value to buying Bitcoin? We just don't get it."

GameStop's stock price plummeted 10% in early trading on Tuesday, wiping out $150 million in market value, as investors reacted to the news. The company's shares have been under pressure in recent months, with the stock price down 75% from its 52-week high.

The company's decision to invest in Bitcoin is seen as a departure from its core business of selling video games and gaming accessories. GameStop has been struggling to adapt to the shift towards digital gaming, which has seen players turn to online platforms such as Steam and the Epic Games Store to purchase and play games.

GameStop's CEO, George Sherman, has been under pressure to turn around the company's fortunes, but his efforts have so far been unsuccessful. The company's decision to invest in Bitcoin has raised questions about whether Sherman is willing to take bold action to shake things up, or if the move is simply a desperate attempt to prop up the stock price.

"We're not sure what the endgame is here," said Pachter. "Is GameStop trying to become a Bitcoin play, or is this just a one-off deal? We just don't know."