Gamestop sinks to borrow 1.3 billion US dollars for buying Bitcoin

(Bloomberg) – The shares of Gamestop Corp. Dashed together when investors reacted to the company’s plans to load debts to buy Bitcoin.

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The retailer of the video game deleted a quarter of its value on Thursday and triggered the market capitalization of $ 3 billion in its greatest decline since last June. The routing came after the company announced on Wednesday afternoon plans for the sale of convertible bonds of 1.3 billion US dollars to finance Bitcoin purchases, since there is a strategy developed by the cryptocurrency lawyer Michael Saylor.

When the company made a first announcement on its Bitcoin strategy on Tuesday afternoon, it triggered a rally in the shares that increased the stock at the time the markets were closed on Wednesday. The additional information about bond sale has led the mood around the stock. The share decreased by 25% to $ 21.36 at 1:47 p.m. in New York on Thursday.

Companies market large converters from convertible debts usually sells pressure at short notice. These bonds are popular with hedge funds, which you use for a specific arbitrage strategy that benefits from the volatility of the underlying shares. To apply this strategy, the Hedge Fund must briefly make the company’s shares.

The Gamestop based in Texas in Grapevine, which is based in Texas, follows a growing list of public companies to accept convertible debts to buy Bitcoin in order to benefit from highly in cryptocurrency. The tactics were made by the strategy of Saylor Pioneering, the company software company, which is officially known as a microstrategy, which has acquired more than 40 billion US dollars from Bitcoin and acquired the share price.

A convertible binding is a hybrid instrument with which the owner can convert the bond into a given number of stocks if the stock increases above a certain level. Gamestop markets its due in 2030, with a conversion bonus of 35% to 40%. The premium determines the price at which the conversion takes place.

Gamestop’s entry into the market also comes when investors seem to grow the strategy towards the strategy. The premium that Gamestop wants to offer for its bonds is less than the premium of around 55% in a similar problem from the strategy in November. Recently, strategy has achieved a sale of 2 billion US dollars in February, which offered investors a more advantageous premium of 35%. With the conditions for a growing series of debt -like instruments offered by strategy, investors suggest that investors demand more from the company.