When GameStop (NYSE: GME) announced in Q1 that its board had “unanimously approved an update to its investment policy to add Bitcoin as a treasury reserve asset,” many investors got an instant flashback to August 2020, when Michael Saylor steered MicroStrategy down the very same road.
Two months later, GameStop went from promise to purchase, scooping up 4,710 BTC for roughly $513 million. Last week it doubled‑down again, launching a $1.75 billion, and quickly upsized to $2.25 billion, zero‑coupon convertible note sale that management says will fund still more coin buys.
So, can a meme‑stock retailer replicate the playbook and skyrocket once again, or has it fumbled the ball?
The Scoreboard So Far
At the moment, Strategy holds about 581,000 BTC, nearly 3 % of all coins that will ever exist, worth ~$63 billion.
Its cumulative cost basis on the slightly smaller 553,555 BTC disclosed at quarter‑end was $37.9 billion, or $68,459 per coin.
Even after a recent pullback, the stock is up by around 3,000 % over the past five years, easily beating both bitcoin and the Nasdaq 100.
GameStop, by contrast, owns 4,710 BTC, about 0.5 % of Strategy’s pile, and its cost basis of around $109 k per coin at purchase is already underwater after bitcoin’s latest dip.
The retailer plans to lever up to buy far more, but right now its holdings are a rounding error next to Strategy’s.
Why Is Gamestop Buying Bitcoin?
Fiat debasement plus a 21‑million‑coin cap makes bitcoin superior “digital gold” say both companies.
Saylor calls the tactic an “infinite money glitch,” borrowing cheaply and letting coin appreciation pay the debt.
GameStop, sitting on $6.4 billion of cash and equivalents after massive equity raises, sees bitcoin as a higher‑leveraged alternative to T‑bills.
And thanks to a crypto‑friendly SEC and a White House openly touting a “Strategic Bitcoin Reserve,” capital markets are eager to fund the trade.
Same Tool, Different Toolboxes
Strategy perfected the art of 0 % convertible notes with 30‑50 % conversion premiums, rolling maturities forward whenever its soaring share price allows. Net leverage sits near 0.2× equity despite $6 billion of converts outstanding.
GameStop is now copying that structure, but noteholders demanded a lower conversion premium, and therefore more dilution, because the underlying business is shrinking.
After the June upsizing, total debt will jump from $15 million to roughly $2.3 billion against only $5 billion of equity, a much less forgiving starting point.
Strategy still sells enterprise analytics software that generated $463 million of revenue last year. GameStop’s retail sales, by contrast, fell 17 % year over year to $732 million in Q1 and store closures continue. That means Strategy can service debt, or buy more BTC, with operating cash flow; GameStop may be forced to keep tapping markets if bitcoin prices stagnate.
BTC‑per‑Share and “Bitcoin Yield”
Saylor pushes two metrics that are the Bitcoin‑per‑Share (BPS) and Bitcoin‑Yield, the rate of BPS growth.
Strategy’s 2025 target is a 25 % BTC yield, essentially promising shareholders a bigger slice of the bitcoin pie without them lifting a finger.
For GameStop to match that feat it must raise and deploy capital faster than its fully diluted share count balloons, and buy coins at prices that let BPS actually rise.
The June note deal will add around 100 million shares upon full conversion, diluting today’s holders by >20 %.
Unless management acquires far more than another 5,000 BTC, BPS will likely shrink, not grow.
Accounting, Volatility and the “Reflexivity” Trap
Under new FASB fair‑value rules effective this year, both firms can mark bitcoin up and down each quarter, smoothing the old impairment‑only distortions. Still, volatility cuts both ways.
Strategy’s equity dropped 47 % from its November 2024 high during a single 30 % BTC pullback, briefly showing a $5.9 billion unrealized loss.
GameStop’s shareholders have already shown less patience, and the stock plunged 22 % the day the first note sale hit the tape. That suggests a lower tolerance for drawdowns, and increases the odds that future capital raises will come at harsher terms, trapping the company in a reflexive spiral of dilution.
Regulatory Tailwinds but Headwinds From Foes
A friendlier SEC and high‑profile imitators, Trump Media, several Fortune 500 treasuries, bolster the narrative that bitcoin on the balance sheet is going mainstream.
Yet those same trends dilute GameStop’s first‑mover aura. If dozens of operating‑light companies become “Bitcoin Treasury Corps,” passive investors can pick from an ETF‑like menu.
Unless GameStop establishes a cost or execution advantage, its stock may not command the 50–70 % NAV premium that props up Strategy’s model.
Valuation Check
Strategy’s market cap of $105 billion implies investors pay $1.00 for just $0.59 of bitcoin exposure. Analysts defend that premium by arguing the company’s embedded leverage turns each 1 % BTC move into ~1.8 % equity upside.
GameStop currently trades around $23 per share, valuing its fledgling 4,710‑coin hoard at ~2× its BTC, an even richer premium despite zero leverage benefit and a shrinking core business.
If that multiple normalizes toward Strategy’s, early holders could feel substantial pain.
What Has to Go Right for GameStop
Management needs to finish its convertible funding spree before bitcoin’s next leg higher so that new coins lift BPS. Buying dips below cost basis rather than chasing parabolic moves will determine long‑term ROI.
Even flat‑to‑slightly‑negative same‑store sales would reassure note investors that interest payments (when they eventually start) can be met without forced BTC sales.
Strategy’s inclusion in the Nasdaq‑100 funnels passive flows into MSTR; GameStop must court a similar index catalyst or risk fading from the zeitgeist.
Cash Burn Is a Risk
Operational cash burn forces liquidation of bitcoin at the worst possible moment. Dilution death spiral if future note issues come with lower conversion prices.
Premium compression as cheaper alternatives (spot ETFs, other treasury corps) proliferate. Regulatory curveball. While Washington is pro‑crypto today, administrations change.
The Odds Are Longer Than Bulls Admit
Strategy enjoyed three tailwinds that GameStop lacks: an early‑mover advantage, a sticky software cash cow, and shareholders conditioned to treat the equity as a leveraged BTC instrument first and foremost.
GameStop begins its journey late in the cycle, with a structurally challenged retail franchise and an investor base that just watched two 20 % one‑day drops on routine financing news.
None of that makes the plan impossible given that bitcoin’s 5‑year, 10‑year and lifetime CAGR numbers are legendary, but it does mean replicating Strategy’s 30‑fold share‑price melt‑up will require near‑perfect execution and a generous market.
The Bottom Line for Investors
If you want pure bitcoin exposure, a low‑fee spot ETF remains the cleanest path. If you crave leveraged bitcoin upside and trust Michael Saylor’s capital‑markets wizardry, Strategy already exists. GameStop offers a third, much riskier flavor, meaning an unprofitable brick‑and‑mortar retailer learning monetary alchemy on the fly.
Could lightning strike twice? Sure, but in finance, the sequel rarely tops the original. For most portfolios, watching this experiment from the sidelines, or with a token‑sized position, seems the more prudent play.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.