On Oct. 7, GameStop (GME) announced the distribution of warrants to its shareholders and convertible noteholders as part of the previously declared “warrant dividend.”
The stock of this video game and gaming merchandise retailer, which fell 10% over the last week, gained 2.36% intraday on Wednesday.
Analysts see it as financial engineering to raise substantial capital without triggering immediate share dilution.
Under the terms, shareholders as of the record date of Oct 3, 2025, will be issued one warrant for every ten shares they own (rounded down). These warrants entitle holders to buy one share of GameStop stock at $32 in cash.
“The Warrants will expire at 5:00 p.m. New York City time on October 30, 2026 (the “Expiration Date”).”
GameStop’s stock fell 21% year-to-date
Image source: TheStreet
A warrant, which works like a long-term option call, gives investors the right, but not the obligation, to buy stock from the company at a set price.
As this is a special dividend issued by GameStop, it is distributed free of charge to its shareholders, generating optimism among them.
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This structure enables GameStop to defer capital raising until its share price exceeds the $32 strike price, indicating the company’s confidence in its future valuation.
And if all the 59 million warrants are exercised, the company expects to generate up to $1.9 billion in gross proceeds, which will be directed towards corporate purposes, investments, and potential acquisitions.
Special dividend creates a speculative overhang
The uncertainty arises from the potential risk of share dilution if the stock trades above $32 and warrant holders exercise their rights, which could make investors hesitant to bid aggressively for the stock.
Related: GameStop takes a swipe at Microsoft after Game Pass blunder
The company’s stock has been pretty volatile, with a 9% gain this month but a 20% loss year-to-date, following a surprising Q2 2025 earnings report.
GameStop’s revenue jumped to $972 million, a 22% year-over-year gain. Management reported robust cash, cash equivalents, and marketable securities of about $8.7 billion at the quarter’s end.
GameStop also revealed a significant exposure to digital assets, holding $528.6 million in Bitcoin, representing a substantial investment in the cryptocurrency.
Additionally, the company recently made news for slamming tech giant Microsoft’s decision to raise the price of its Xbox Game Pass to $29.99 from $19.99 per month.
After the news of the price hike, GameStop announced on X that it will continue selling it at the original price of $19.99.
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