GameStop Instantly Lost Billions Trying To Follow Michael Saylor’s Bitcoin Strategy

Key Takeaways

• GameStop shares dropped 22% after announcing plans to raise $1.3 billion through convertible bonds to buy Bitcoin.
• The company will issue 46 million new shares, boosting its cash reserves to $6.1 billion.
• Analysts question the move, citing GameStop’s high valuation and speculative strategy.

GameStop’s attempt to follow Michael Saylor’s Bitcoin playbook has backfired—at least for now.

After unveiling plans to raise $1.3 billion through convertible bonds to purchase Bitcoin (BTC), the gaming retailer’s stock plummeted 22%, erasing billions in market value.

The sharp selloff has drawn comparisons to Strategy’s debt-driven Bitcoin strategy, but analysts warn that GameStop lacks the fundamentals to replicate Saylor’s success.

Meanwhile, short sellers have piled in, triggering restrictions on short selling as GameStop stock trades at record volumes.

GameStop’s Bitcoin Gambit Sparks Market Turmoil

On Thursday, GameStop’s share price collapse marked its steepest single-day loss since June 2024.

The company’s announcement came just a day after a 12% rally, fueled by speculation about its growing involvement in the crypto industry.

Under the plan , GameStop will issue convertible senior notes, a type of debt that can later be converted into shares, raising concerns among investors about dilution.

The issuance of 46 million new shares will increase GameStop’s cash reserves to $6.1 billion.

Despite the selloff, GameStop appears committed to following a Bitcoin-centric corporate strategy, allowing it to purchase the asset with its own capital or future debt and equity proceeds—mirroring Strategy’s approach.

But analysts remain skeptical. Some warn that GameStop’s stock price, already driven by the meme-stock phenomenon, could face further declines before the bond issuance is completed.

Short Sellers Seize the Moment

The surge in short selling reignited echoes of GameStop’s infamous 2021 short squeeze when retail traders sent its stock price soaring against institutional investors.

According to TradingView data, short positions on GameStop jumped 234% on March 27, reaching 30.85 million shares.

This prompted the New York Stock Exchange (NYSE) to impose a Short Sale Restriction (SSR) —a rule that limits the ability to short a stock once it drops more than 10% in a single session.

At the time of writing, GameStop was trading at $22.55, up 2.1% in pre-market trading on Friday. However, with shorting restrictions in place, the stock’s next move remains uncertain.

During yesterday’s trading hours, GameStop traded 50 times more shares than the previous Thursday, raising concerns about naked short selling, a practice in which investors sell shares without actually borrowing them.

The short-selling volume approached levels seen in January 2021, when GameStop’s stock skyrocketed after a coordinated buying spree by retail investors.

Why GameStop’s Strategy Differs from Strategy’s

While GameStop’s Bitcoin strategy has drawn comparisons to Strategy (MSTR)—which has amassed more than 500,000 BTC—analysts caution against assuming the same outcome.

Strategy’s approach has historically involved issuing convertible bonds, leading to initial stock price dips due to hedging activity from bondholders.

However, as Bitcoin’s price soared, short sellers were forced to cover their positions, ultimately fueling MSTR’s meteoric rise.

GameStop is facing a similar dynamic, according to analyst Han Akamatsu. 

Institutional investors buying GameStop’s bonds are hedging their risk by shorting the stock and applying downward pressure on its price.

If Bitcoin surges or GameStop’s fundamentals improve, a short squeeze could force a reversal—driving share prices higher.

How Investors Profit from the Convertible Bond Play

According to Akamatsu , bond investors typically short a significant portion of the stock’s value, betting that the bond’s conversion price will be lower than the market price.

The bond conversion price is determined by GameStop’s average stock price between 1 PM and 4 PM EDT on the conversion date.

Investors want the stock price as low as possible before conversion to maximize their gains.

This means that while GameStop’s stock price is suffering now, there is potential for a dramatic rebound—if Bitcoin rallies or GameStop’s short sellers get squeezed.

Can GameStop Turn This Around?

For now, GameStop’s Bitcoin pivot is a high-risk, high-reward gamble.

The retailer has no underlying business transformation to justify its stock price, making it heavily reliant on speculation and external market forces.

While Bitcoin adoption has propelled companies like Strategy to new highs, GameStop’s future depends on whether investors buy into its strategy—or if the market sees it as another speculative meme stock play.