GameStop stock falls 25% after announcing plan to add Bitcoin as treasury asset

From Yahoo Finance: 2025-03-27 14:42:00

Shares of GameStop (GME) fell 25% after announcing plans to add bitcoin (BTC) as a treasury reserve asset. The stock hit a low of $21, down 28% from its peak. A $1.3 billion convertible note offering for BTC acquisition caused a swift sell-off as investors scrutinized the financing.

Investors are wary of GameStop’s move, causing a shift in ownership. The sharp decline may be linked to prospective bond buyers selling or shorting the stock during the convertible bond pricing period. Analysts predict a further drift in share price before the convert issuance.

GameStop’s decision to convert cash into bitcoin follows MicroStrategy’s strategy. However, MSTR trades at less than twice its bitcoin value, while GME trades at more than twice its cash holdings. Analysts doubt the success of the offering, questioning why investors would pay more than 2x cash value for a BTC conversion.

GameStop joins the trend of Wall Street firms converting cash into bitcoin, following in the footsteps of MicroStrategy. CEO Michael Saylor’s success with BTC adoption has influenced many companies to do the same, especially with the U.S. government showing interest in digital asset development.

While some advocate for companies to adopt bitcoin as a reserve strategy, not everyone agrees. Bitcoin skeptic Peter Schiff warns against investing in companies buying bitcoin, citing GameStop’s recent losses as evidence. Smarter investors are selling as they realize the risks associated with allocating cash to BTC.

Read more: GameStop Tumbles 25% Following Bitcoin Convertible Bond Plan. What’s Happening?