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Investing.com -- GameStop Corp (NYSE:GME) stock has dropped over 22% Thursday, as it is doubling down on collectibles, with trading cards emerging as a central focus in its evolving retail strategy, while seeking financial flexibility through a newly announced $1.75 billion convertible note offering. CEO Ryan Cohen told shareholders during the company’s 2025 annual meeting that the trading card business, spanning sports, Pokémon, and other collectibles, is a “natural extension” of the company’s model and aligned with GameStop’s core customer demographic.

“We are focusing on trading cards as a natural extension of our existing business,” Cohen said at the meeting. “Unlike software, it’s tactile. Unlike hardware, it has high margin potential. It’s a logical expansion.” GameStop’s collectibles segment grew in the first quarter of fiscal 2025, signaling early traction in the renewed focus.

The pivot to trading cards coincides with GameStop posting its first profitable first quarter since 2019, attributed to aggressive cost discipline, inventory rightsizing, headcount adjustments, and a narrowing of its geographical footprint. Cohen praised frontline employees for their contribution to this turnaround. “They’re the ones listing inventory, sweating on the job, serving customers, processing trade-ins... They’re the backbone of GameStop,” he said.

However, the company’s financial strategy raised investor questions after its Wednesday announcement of a $1.75 billion private offering of 0.00% convertible senior notes due in 2032. Shares of GameStop have dropped in trading Thursday following the announcement, suggesting market skepticism over dilution risk or the clarity of capital deployment.

The notes will be unsecured and will not bear interest or accrete in principal, with conversion terms, into cash, shares, or a mix of both, to be finalized at pricing. GameStop also granted initial buyers a 13-day option to purchase an additional $250 million in notes. Proceeds are earmarked for general corporate purposes, including investments under the company’s Investment Policy and selective acquisitions.

General Counsel Mark Robinson addressed the offering during the meeting’s Q&A session, saying, “We have raised capital only when we believe it’s in the best interest of our shareholders and do believe it’s an attractive financing product given the terms.” He added that the company would deploy capital based on rigorous analysis and would not pursue acquisitions “simply because we have the cash.”

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