GameStop Crashes 25% Following Controversial Bitcoin Convertible Bond Announcement

GameStop Stock Plummets 25% After Bitcoin-Backed Bond Announcement Sparks Investor Doubt

GameStop’s latest financial maneuver—a Bitcoin-funded convertible bond offering—has sparked a steep sell-off, with shares dropping 25% on Thursday as skepticism mounts over the strategy’s long-term viability.

Shares of GameStop (GME) sank to just above $21 during the session, marking their lowest level since October and reversing all gains made earlier in the week following the company’s announcement that it would allocate part of its treasury reserves to Bitcoin (BTC).

The plunge came after GameStop revealed plans late Wednesday for a $1.3 billion, 0% convertible bond offering to fund its Bitcoin acquisition. While crypto enthusiasts initially cheered the move, investor sentiment quickly soured as concerns over dilution and the structure of the offering took hold.

“Many existing shareholders are not on board with this decision, leading to high trading volume and a shift in market positioning,” said Louis Liu, Chief Investment Officer of Mimesis Capital, in a post on X.

Analysts noted that the stock’s decline could also be tied to the bond pricing period, during which some investors may be selling or shorting shares in anticipation of a lower valuation. James Van Straten, a senior analyst at CoinDesk, pointed out that similar trends occurred when MicroStrategy (MSTR) and Semler Scientific (SMLR) issued convertible bonds.

Wedbush analyst Michael Pachter, who maintains an underperform rating on GME, expects further price weakness. “Convertible bondholders are essentially wagering on the persistence of GameStop’s meme stock status for another five years, without any interest payments,” he explained.

Pachter contrasted GameStop’s move with MicroStrategy’s Bitcoin strategy, highlighting a key difference: “MSTR trades at less than twice the value of its Bitcoin holdings, whereas GME is currently valued at more than twice its cash reserves. This raises questions about the justification for the premium.”

“We don’t see strong demand for this offering,” Pachter added. “Investors who want exposure to Bitcoin can do so directly through BTC or a Bitcoin ETF without paying an additional premium for GameStop’s execution.”

GameStop joins a growing number of public companies shifting treasury assets into Bitcoin, a trend pioneered by MicroStrategy under the leadership of Bitcoin advocate Michael Saylor. The movement has gained momentum, particularly as U.S. President Donald Trump pushes policies that position the U.S. as a leader in digital asset adoption.

Despite Saylor’s advocacy for more corporate and even governmental Bitcoin adoption, skepticism remains widespread.

“Speculating on companies buying Bitcoin is a flawed investment approach,” said noted Bitcoin critic Peter Schiff in a post on X. “GameStop has erased all of its Bitcoin-driven gains from yesterday and is actually down 2% over the past two days. The speculative traders have already jumped in, and now the smart money is exiting, recognizing that this model isn’t a sustainable business strategy.”

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