GameStop (NYSE: GME) shares tumbled more than 6% in pre-market trading Thursday after the company announced a $1.3 billion private offering of convertible senior notes to qualified institutional buyers.
The proposed offering consists of 0.00% Convertible Senior Notes due in 2030, meaning they will not bear regular interest, nor will the principal amount accrete over time. GameStop has also granted initial purchasers an option to buy an additional $200 million worth of notes within 13 days of the issue date. The conversion rate and other specific terms will be determined at the time of pricing.
Investor reaction to the news has been cautious, as convertible note offerings can dilute existing shares if noteholders choose to convert their holdings into equity. Furthermore, the structure of these notes, which do not generate interest payments, adds uncertainty regarding the company’s approach to debt management.
GameStop stated that it plans to use the proceeds for general corporate purposes, including an investment in Bitcoin as part of its broader investment strategy. This decision introduces another layer of risk, as exposure to cryptocurrency markets could increase volatility in the stock, given Bitcoin’s fluctuating value.
The development comes shortly after GameStop (NYSE: GME) released its fourth-quarter earnings report. The video game retailer posted adjusted earnings per share of $0.29, beating analysts’ expectations of $0.09. However, revenue fell to $1.28 billion from $1.79 billion a year ago, missing forecasts of $1.5 billion.
Jennifer Tacker is a staff writer at ABBO News. She holds a B.A. from the University of Waterloo and a B.Ed from Western University. Jennifer has been active in the stock market and crypto sector for a decade. She specializes in technical analysis and trading strategies. Read Full Bio
