1.3 billion dollars bet on Bitcoin, can GameStop's transformation gamble win?

Once upended Wall Street by soaring stock prices, it is betting on bitcoin in an attempt to leverage a new growth engine. This article is from an article written by Fairy and compiled by ChainCatcher. (Synopsis: Beyond the Store of Value: Where is Bitcoin's BTCFi Footsteps Now?) (Background added: Buy stocks and smoke bitcoin!) Japanese listed gaming giant Gumi launches 16 million yen shareholder benefit plan) Yesterday, GameStop officially announced that it will include bitcoin in the company's reserve assets, becoming the latest listed company to deploy cryptocurrencies. The established gaming retailer is trying to emulate Strategy's success and find a breakthrough at a time when traditional business growth is lacking. From "King of Retail Investors" to "Crypto Believers", can GameStop's transformation lead to new life? GameStop's transformation is lost In Q4 2024, GameStop increased net revenue, but net sales fell by $511 million year-over-year, and it closed 590 U.S. stores in one year. Wedbush analyst Michael Pachter once rated GameStop "underperform" and put a $10 price target on its outlook, taking a pessimistic view of its outlook. The problem with GameStop boils down to the fact that its core business is gradually being eliminated from the market. As a traditional retailer that relies on physical stores to sell game hardware, software and peripheral products, it has been ruthlessly marginalized by the rise of digital game downloads and e-commerce platforms. Faced with the reality of declining sales and shrinking stores, GameStop was forced to embark on a radical and uncertain transformation path. Over the past few years, GameStop has been trying to reinvent itself: from promoting its e-commerce business, to adjusting its investment strategy, to entering the NFT track, launching an NFT marketplace and digital asset wallet. "GameStop's strategy has been adjusted about six times in the past three years," Pachter bluntly says, and the company is always looking for a new direction to survive. Today, GameStop is betting its chips on Bitcoin, trying to open up a whole new path of growth. This new bet may determine its ultimate fate. Mimicking Strategy, $1.3 billion bonds bet on Bitcoin GameStop borrows Strategy's classic strategy of financing the purchase of Bitcoin by issuing convertible bonds. The Company plans to issue a private placement of $1.3 billion of 0.00% convertible high-end notes, which will mature in 2030. To further attract investment, GameStop also granted the initial purchaser a 13-day option to purchase up to $200 million in additional notes. The Notes are general unsecured obligations of GameStop, do not accrue term interest, and the principal amount does not accrue. Investors may choose to convert the Notes into cash, GameStop Class A common stock, or a combination of both prior to maturity, as determined by GameStop in its sole discretion. In the relevant filing, GameStop makes it clear that its investment policy allows investing in certain cryptocurrency assets, including Bitcoin and USD stablecoins. In addition, GameStop further revealed that the company may invest some of the proceeds of cash, debt or equity financing in Bitcoin in the future, without setting an upper limit on its Bitcoin holdings, and may also sell its Bitcoin holdings. As of February 1, GameStop had cash reserves of $4.77 billion, meaning the company had plenty of room to make this strategic investment. This cross-border experiment of "Meme shares + cryptocurrency" began to be staged. Good for the crypto market, but not necessarily good for GameStop? After the announcement, GameStop's stock price rose 11.65% during the trading session, but fell 7.40% after hours compared to the closing price. While this move has breathed new life into the crypto market, investors have debated the prospects for this transformation of GameStop. Strategy's share price has risen 23 times since it began buying Bitcoin in 2020. However, whether this success can be replicated on GameStop is still uncertain. Wedbush analyst Michael Pachter said: "The problem is that Strategy is currently trading at about twice the price of its Bitcoin position. If GameStop had bought all of its $4.6 billion in cash and traded at twice its Bitcoin holdings, its share price could have fallen by $5." Market watchers' criticism is more blunt: community member @KabraxFX said: "This means that GME cannot find an effective way to grow its business with its huge cash reserves. In my opinion, it's bearish." Investor @MonkEchevarria said: "GameStop's move is indeed interesting, but Bitcoin cannot compensate for its weak fundamentals. Earnings beating expectations is good, but it doesn't change its sluggish growth and weak cash flow. Price does not equal value, hype does not equal strategy. If you look at it from the perspective of more than three years, this is more like a desperate turn than a real transformation." Some even joked that GameStop is now a hedge fund. The story of GameStop is always moving forward in subversion and controversy. Bitcoin may add a splash to GameStop's balance sheet, but it won't necessarily solve its business woes. In this ever-changing story, the only certainty is the uncertainty itself. Related Stories Beyond Store of Value: Where Are the Footsteps of Bitcoin BTCFi Now? Buy stocks and pump Bitcoin! Japanese listed game giant Gumi launches 16 million yen shareholder benefit plan Microsoft, Alibaba hint at "AI computing power bubble"? Shrinking server spending, bitcoin miners falling ($1.3 billion bet on bitcoin, can GameStop's transformation bet win?) This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Blockchain News Media".