GameStop Raises Nearly $933.4 Million Through Share Sale

GameStop, the struggling video game retailer, announced on Friday that it raised nearly $933.4 million by selling 45 million shares. This news sent its shares up more than 12% in after-hours trading. 

The share sale was a strategic move for the company as it continues to face challenges in the brick-and-mortar retail sector. Many customers are shifting to e-commerce platforms for their gaming and collectible purchases.

Details of the GameStop Share Sale:

GameStop had revealed its plan to sell shares earlier this month, capitalizing on renewed retail investor interest driven by “Roaring Kitty” Keith Gill. 

Gill, known for his bullish stance on GameStop during the 2021 meme stock rally, sparked a fresh buying frenzy by sharing memes and movie clips on social media.

“At-the-Market” Offering:

The shares were sold through an “at-the-market” (ATM) offering, where shares are sold at the prevailing market price rather than at a pre-determined price. GameStop did not disclose the price at which the shares were sold, but Reuters calculations suggest an average price of $20.74 per share. At the time of the announcement, GameStop shares were trading at $21.93.

The proceeds from the share sale, amounting to $933.4 million, will be used for general corporate purposes. This could include potential acquisitions and investments to revitalize the company’s business model and expand its gaming industry footprint.

GameStop Market Reaction and Performance:

The share sale announcement saw GameStop’s stock rally more than 12% after hours. The company has been a focal point of retail investor interest, particularly following Keith Gill’s social media activity. 

The stock saw significant volatility, quadrupling from the end of April through May 14, before giving back about 60% of those gains by Friday’s close.

Despite the successful share sale, GameStop has been experiencing a decline in sales. The company recently projected its first-quarter net sales to fall between $872 million and $892 million, compared to $1.24 billion in the same period last year. 

This decline underscores the company’s challenges as it adapts to varying consumer behaviors and a competitive retail environment.

Comparison with AMC:

GameStop’s fundraising strategy mirrors that of another retail favorite, AMC. The theater chain recently completed a $250 million “at-the-market” share sale program, leveraging similar investor enthusiasm. 

Both companies have become emblematic of the retail trading phenomenon, where individual investors have significantly influenced market dynamics.