GameStop (NYSE: GME) stock plunged nearly 25% on Thursday after the video game retailer announced plans to raise $1.75 billion through the sale of convertible bonds. The move, aimed at boosting cash reserves, involves issuing convertible senior notes that investors can later exchange for equity, potentially diluting existing shareholders and dragging down the stock’s value.
The company, best known as a “meme stock” following its explosive 2021 rally fueled by Reddit traders from r/wallstreetbets, is now facing renewed skepticism from investors. The bond offering follows a string of weak financial results and broader shifts in the gaming industry. On Tuesday, GameStop reported first-quarter revenue of $748 million, a 6% year-over-year decline, as gamers continue to favor digital downloads over physical game purchases.
Adding to the intrigue, GameStop in March updated its investment policy to include bitcoin as a treasury reserve asset, signaling a willingness to embrace high-risk financial strategies. However, these moves have not offset persistent declines in its core business, with annual revenue falling steadily since 2023.
As GameStop navigates an uncertain future, Thursday’s sharp selloff underscores investor concern over its long-term viability — and the consequences of financial maneuvers that could further dilute shareholder value.
