GameStop Plunges 25% as Bitcoin-Funded Convertible Bond Plan Faces Scrutiny

GameStop’s stock nosedived 25% on Thursday as investors reacted negatively to the company’s Bitcoin-backed financing strategy, raising concerns over its convertible note offering and long-term viability.

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

The sell-off came after GameStop disclosed plans late Wednesday for a $1.3 billion, 0% convertible bond issuance to finance its Bitcoin purchase. Initial enthusiasm among crypto investors quickly gave way to doubt as market participants analyzed the offering’s potential impact.

“A lot of existing shareholders are unhappy with this decision, leading to a large trading volume shift,” said Louis Liu, Chief Investment Officer of Mimesis Capital, in a post on X.

Analysts also pointed to the bond pricing period as a potential factor in the decline, with some investors selling or shorting GME shares in anticipation of lower valuations. James Van Straten, a senior analyst at CoinDesk, noted that similar patterns occurred when MicroStrategy (MSTR) and Semler Scientific (SMLR) issued convertible notes.

Michael Pachter, an analyst at Wedbush who maintains an underperform rating on GME, predicted that the stock could continue drifting lower. “A convertible bondholder is essentially betting on GameStop’s meme stock status to persist for five more years without earning a coupon,” he said.

Comparing the strategy to MicroStrategy’s Bitcoin playbook, Pachter highlighted a key distinction: “MSTR trades at less than twice the value of its Bitcoin reserves, whereas GME is trading at more than twice its cash reserves. This discrepancy makes the offering a tough sell.”

“We anticipate limited investor interest,” Pachter added. “There’s little justification for paying such a premium for GameStop’s Bitcoin holdings when direct BTC investments or ETFs provide a more straightforward alternative.”

GameStop joins a growing list of public companies adopting Bitcoin as a treasury asset, a movement spearheaded by MicroStrategy under the leadership of Bitcoin advocate Michael Saylor. The trend has gained traction, particularly as U.S. President Donald Trump promotes policies aimed at positioning the U.S. as a global hub for digital assets.

Despite Saylor’s continued push for broader corporate and even governmental Bitcoin adoption, skepticism lingers.

“Betting on companies that buy Bitcoin isn’t a sound investment strategy,” said longtime Bitcoin skeptic Peter Schiff in a post on X. “GameStop has now erased all of its Bitcoin-fueled gains from yesterday and is actually down 2% over the past two days. The speculators have rushed in, and now the smart money is exiting, recognizing that this approach isn’t sustainable.”