Struggling video game retailer GameStop will try to turn around its fortunes by adopting a strategy of corporate investments in cryptocurrency. The company announced earlier this week that its board approved a plan to buy Bitcoin using corporate cash.
In order to fund its Bitcoin purchase, GameStop will attempt to raise $1.3 billion through the Convertible Senior Notes offering. The notes will mature in 2030 at which they will be redeemable in cash, shares of GameStop’s Class A common stock, or a combination of both.
Bitcoin, the world’s most valuable cryptocurrency, reached an all-time high price of $109,026.02 per coin back in January. It has since lost 18% of its value and has been hovering between $84K and $87K in recent weeks.
GameStop is attempting a strategy made famous by Michael Saylor’s MicroStrategy, which began investing in Bitcoin in 2020 as a hedge against inflation. Since then, MicroStrategy’s stock soared by close to 3,000%. A number of other companies, including electric vehicle maker Tesla and healthcare provider Semler Scientific, were inspired to follow the same blueprint in recent years.
GameStop’s stock had a brief jump after the announcement of the Bitcoin purchase plan, climbing by 15% at one point on Wednesday and closing at $28.36 per share. It later dipped in the after-hours trading, going down by 7.62%.