GameStop Stock Is Plunging. Bitcoin Plans Aren't Going Down Well. — Barrons.com

By Brian SwintGameStop, the videogame retailer that became famous as a meme stock in the Covid-19 pandemic, was plunging early Thursday.The main reason is because it announced plans to raise money that could be used to fund its new corporate strategy of buying Bitcoin. The company said on Wednesday that it would sell $1.75 billion in 0% senior notes that will mature in 2032.It isn't just that the cash could be used to buy cryptocurrencies, which are notoriously volatile. The notes will also be convertible, which means they could be turned into shares, which would dilute current shareholders. Gamestop's current market capitalization is just under $13 billion.GameStop stock plunged 19% in early trading to $23.05. Coming into the session, it was still up 30% over the past three months.It is understandable that GameStop is trying something new. Its future as a seller of videogames has been precarious for years as more people play through the cloud.That is one reason why institutional investors started selling the stock short in 2021 — in other words betting that it would fall. Groups of retail investors noticed, and rallying on social media, starting driving the price up and making money at Wall Street's expense in the process. The story was dramatized in the 2023 movie Dumb Money.GameStop said it would start investing in Bitcoin in March. It said Tuesday that it has bought 4,170 coins. At the current price of $107,000, that is worth almost $450 million. The strategy mimics MicroStrategy, a company that started as a software developer but now mainly trades crypto.Write to Brian Swint at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.