GameStop Corp. is looking to sell $1.3 billion in convertible bonds to finance bitcoin purchases as it pursues a strategy developed by cryptocurrency advocate Michael Saylor, Bloomberg has reported. The video game retailer rallied after the company said Tuesday that its board had approved a plan to add bitcoin as a reserve asset to the Treasury. That was followed by a filing Wednesday of a planned bond sale that would be used for general purposes, including buying bitcoin.

Grapevine, Texas-based GameStop joins a growing list of public companies taking out convertible debt to buy bitcoin in an attempt to capitalize on the cryptocurrency’s rise. The tactic was pioneered by Saylor’s Strategy, an enterprise software company formally known as MicroStrategy, which has acquired more than $40 billion worth of bitcoin, sending its stock price soaring.

A convertible bond is a hybrid instrument that allows the holder to convert the bond into a predetermined number of shares if the stock rises above a certain level. GameStop is selling its notes, which mature in 2030, at a conversion premium of 35% to 40%, according to people familiar with the deal, who spoke on condition of anonymity because the information is confidential. The premium determines the price at which the conversion occurs.

GameStop Corp. seeks to sell convertible bonds

GameStop’s entry into the market comes even as investors appear increasingly skeptical of the strategy. The premium GameStop wants to offer on its bonds is less than the roughly 55% premium Strategy offered for a similar issue in November. Strategy recently sold $2 billion in February, offering investors a more lucrative 35% premium. That, along with the terms of the growing number of debt instruments Strategy is offering, suggests investors are demanding more from the company. GameStop shares fell after the filing was made public on Wednesday, erasing some of the gains made earlier in the day. As of 5:30 p.m. New York time, the shares were down 6.6% at $26.44.

GameStop’s push to rapidly increase its bitcoin purchases comes against a very different backdrop than when Strategy and other imitators flooded the market in late 2024. The cryptocurrency has fallen about 18% from its all-time high in January, and investors are fleeing a variety of risky assets amid tariff uncertainty and volatile economic data. Still, the tactic is appealing to GameStop as it seeks to diversify away from its core business, which has slowed as the video game business has shifted to digital. The retailer said Tuesday night it would close more stores after fourth-quarter revenue fell 28% to $1.28 billion from a year earlier. Sales of hardware, accessories and software fell in the quarter, though sales of collectibles rose.

GameStop’s Market Entry

Cohen became GameStop’s chairman in 2021 — and CEO in 2023 — after a fight with activists that helped turn the company into a meme stock in the midst of the pandemic. Since then, he has tried various strategies to revive the struggling company. In 2023, the company announced that Cohen would be allowed to use company cash to buy shares in other companies. There was recent speculation among investors that GameStop might follow in Strategy’s footsteps after Cohen posted a photo of himself and Saylor on social media in early February. Companies ranging from medical technology providers to hotel developers have been inspired by Strategy’s rise. Its shares have surged 2,600% since co-founder Saylor began investing company cash in bitcoin in 2020 as a hedge against inflation. The cryptocurrency has gained nearly 700% over the same period. Many companies have used company cash to buy digital tokens. But a growing number have also taken the riskier route, taking on debt to fund Strategy. Convertible bonds can be more attractive to companies than selling shares because the bonds don’t immediately dilute shareholders. These instruments are popular with hedge funds because the securities allow for a kind of arbitrage that takes advantage of the volatility of the underlying stock. GameStop could be particularly attractive to this crowd because of the volatility it has experienced since becoming a retailer darling in 2021.