Shares slumped more than 8%, wiping out nearly all gains from Wednesday, as traders frowned upon the company’s decision to borrow that much cash for Bitcoin.

💎 GameStop Shares Tumble 8%

• GameStop stock GME turned lower in pre-market trading Thursday after the video-game retailer announced plans to borrow cash to fund its Bitcoin buying spree. The news, which knocked shares lower by 8%, came a day after the company said in its earnings report that it’s decided to put Bitcoin on its balance sheet.
• To make Bitcoin a treasury reserve asset, GameStop said it is seeking to sell $1.3 billion of convertible bonds, which will be used “for general corporate purposes, including the acquisition of Bitcoin in a manner consistent with GameStop’s Investment Policy.”

✋ Traders Push Back on BTC Buying

• The notes, which are set to yield exactly 0.00%, are due in 2030 and give buyers the option to convert their holdings into shares at $28.46 or cash. GameStop also said it could decide to upside its cash-raising effort by up to $200 million.
• Why aren’t traders happy with that decision if they snapped up the shares just a day earlier, leading to a solid 12% rise in the stock’s price? Isn’t Bitcoin the perfect match for the OG meme stock?

🚧 GameStop’s Bitcoin Dilemma

• Lately, GameStop’s turnaround efforts have been showing some good results. Cost cuts, store closures and a pivot to collectibles (trading cards) have shrunk net operating losses to less than $10 million in each of the two fiscal years. But there’s also the part where GameStop is making money with your money by shoving it into Treasury bills and collecting interest.
• GameStop has $4.8 billion in cash and generates about $220 million in interest each year. Adding a volatile asset like Bitcoin to the mix could either boost the bottom line (if the coin goes up) or drag it under, hurting the safe returns generated by Treasury bills.