Embattled GameStop surges after fetching $933m from stock sale

Embattled GameStop surges after fetching $933m from stock sale

FILE PHOTO: A screen displays the logo and trading information for GameStop on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 29, 2022. REUTERS/Brendan McDermid/File Photo

GameStop made nearly $933.4 million by selling 45 million shares, the struggling videogame retailer said on Friday, sending its shares up more than 12% after the bell.

The company largely relies on brick-and-mortar stores and has been grappling with customers turning to e-commerce firms for buying video games and collectibles.

It had disclosed its share sale plan earlier this month amid a retail buying frenzy sparked by the return on social media of “Roaring Kitty” Keith Gill, whose bullish calls on the company spurred the 2021 meme stock rally.

The deal was structured as an “at-the-market” offering, in which shares are sold at the prevailing market price instead of a pre-determined one.

The rally in the shares of GameStop, which has become a poster child of the retail mania, began after Gill shared a meme and several video clips from movies.

The stock more than quadrupled from the end of April through May 14, and then gave back about 60% of that gain, as of Friday’s close.

GameStop did not disclose the price at which it sold the shares, but based on Reuters calculations, they were sold at an average price of $20.74 each. Its shares were currently trading at $21.93.

The company said it will use the proceeds from the sale for general corporate purposes, which may include acquisitions and investments.

GameStop last week said it expects its first-quarter net sales to drop to between $872 million and $892 million, compared with $1.24 billion a year earlier.

Theater chain AMC, another retail darling, had also completed a $250 million “at-the-market” share sale program last week.

Reuters

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