GameStop’s “Buy Bitcoin” Idea Backfires And Roaring Kitty’s Shares Get Hit The Hardest

Sometimes it feels like companies map out billion-dollar strategies on bar napkins minutes before blasting them through a PR wire. Like someone at GameStop said, “What if we just bought a ton of Bitcoin?” and instead of laughing or asking basic questions like, “How would we pay for that?” the board nodded in unison and approved it.

This week, that theory got a lot more real.

Yesterday, GameStop stock jumped 12% completely on the back of a vague crypto promise and that they’re copying Michael Saylor’s homework… But today, the stock’s down 15% after GameStop officially announced plans to raise $1.3 billion in fresh capital to buy Bitcoin.

How? By issuing convertible senior notes due in 2030… basically debt that can turn into stock down the line. This will increase GameStop’s cash reserves to $6.1 billion, but at the cost of potentially diluting shareholders by 46 million new shares.

That dilution stings. Especially if you’re someone like Roaring Kitty (a.k.a. Keith Gill) who recently revealed a 9 million share position in GameStop.

Before the crash, with GameStop trading around $30 per share, his position was worth nearly $270 million. But with the stock now down to $25.50, that number is closer to $229.5 million… a $40.5 million drop overnight. And that’s before the dilution even begins to get priced in.

The logic behind GameStop’s move is simple… mimic MicroStrategy, the company that’s gone all-in on Bitcoin under CEO Michael Saylor. That strategy has worked… MSTR is up 69% over the last year, and the company now holds over 447,000 BTC.

But the difference is that MicroStrategy trades at less than 2x its Bitcoin holdings. While GameStop’s market cap sits at $12.7 billion, which is already more than 2x its projected $6.1B in cash… and that’s before they even buy the Bitcoin.

In other words, if GameStop tries to copy Michael Saylor’s playbook, the stock would actually have to fall just to match the valuation logic. But all of that assumes GameStop can even execute on this plan. And that’s the real issue… because every idea sounds good in theory until you actually have to deliver on it.

Look at the fundamentals. GameStop’s core business is shrinking fast. Revenue in the fourth quarter dropped 28% year-over-year, falling to $1.28 billion. Adjusted EBITDA for the entire year came in at just $36.1 million, a steep decline from $64.7 million the year prior. This isn’t a company sitting on a stable business model or a clear turnaround strategy. It’s a company in retreat, hoping a headline can buy it more time.

And instead of investing that $1.3 billion in improving operations (whether through logistics, tech, talent, or just fixing the retail experience) GameStop is using it to make a highly speculative bet on one of the most volatile assets in financial history.

There’s no clear roadmap behind the Bitcoin strategy. No operational framework, no hedge against downside risk, no details on how it would tie back to the core business. Just a vague statement that it wants to “adopt Bitcoin as a treasury reserve asset,” like it’s checking off a box to please a small crowd on Reddit.

Everything sounds good on paper, until you announce you have to rob Peter to pay Paul.

P.S. Just when you thought our beloved congressmen couldn’t get any greasier, one Republican lawmaker decided to YOLO $175k into a stock… right before a major FDIC announcement hit. Lucky timing? Insider edge? You be the judge. We broke it all down inside our recent Stocks.News premium article… click here to check it out ASAP. 

Stock.News does not have positions in companies mentioned.