GameStop Shares Drop 25% After Bitcoin Convertible Bond Announcement
GameStop (GME) shares fell 25% to just above $21, erasing recent gains following the announcement of adding bitcoin (https://holder.io/coins/btc/) as a treasury reserve asset. The decline occurred after the company revealed plans for a $1.3 billion convertible note offering to finance its BTC acquisition.
- GME's price dropped over 28% from nearly $30 on Wednesday.
- The initial excitement among investors waned as they assessed the financing details.
- Analysts noted that existing shareholders are critical of the move, leading to high trading volume.
- Convertible bond pricing may prompt selling or shorting of GME stock, similar to trends seen with MicroStrategy (MSTR).
- Wedbush analyst Michael Pachter expressed skepticism about the offering's success, highlighting GME's valuation compared to cash holdings.
- Critics argue that investing in companies buying BTC is not a reliable strategy.
GameStop's situation reflects broader market dynamics as other firms have adopted bitcoin as a reserve asset, fueled by earlier successes like those of MSTR. However, concerns regarding long-term viability persist.