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GameStop (NYSE:GME) fell sharply in early trading on Thursday after the company disclosed that it intends to offer $1.75 billion aggregate principal amount of 0.00% convertible senior notes due 2032 in a private offering.
In its SEC filing, GameStop (NYSE:GME) said it intends to use the net proceeds from the offering for general corporate purposes. Of course, the company recently announced that it purchased 4,710 Bitcoin (BTC-USD) and is open to acquiring more cryptocurrencies.
With its Q1 earnings report, GameStop (GME) reported revenue fell 16.9% year-over-year. On the positive side, GME’s adjusted net income improved from a loss of $36.7 million a year ago to a profit of $83.1 million. The company held $6 billion in cash at the end of the quarter before its Bitcoin purchase was executed.
Wedbush Securities analyst Michael Pachter weighed in on the stock after the earnings report. “It is difficult to understand why any investor would be willing to pay more than 2x cash value for the possibility of GameStop converting more of its cash into Bitcoin, especially since these investors could invest in Bitcoin or a Bitcoin ETF themselves,” he highlighted. Pachter thinks GameStop’s (GME) foray into the trading card business is the only recent business venture to see modest success at the moment. Wedbush has an Underperform rating on GameStop (GME) and a price target of $13.50.
Shares of GameStop (GME) were down 13.1% in premarket action to $24.82.