GameStop slips after plan to offer up to $ 1 billion in stock
- GameStop shares fell on Monday after the company filed a share offering plan to sell up to 3.5 million shares.
- The video game retailer said the proceeds will be used for its turnaround strategy.
- GameStop also said preliminary global sales increased 11% in the first nine weeks of fiscal 2021.
- See more stories on the Insider business page.
GameStop shares fell sharply on Monday after the video game retailer said it could sell up to an additional 3.5 million shares to raise funds to support its recovery strategy.
The company has filed a plan with the Securities and Exchange Commission under which it may offer and sell common stock from time to time through a “to market” stock offering program. GameStop has said it will not sell more than 3.5 million shares, and total gross proceeds will not exceed $ 1 billion.
GameStop shares fell 13% to $ 166.10 at the start of Monday’s regular session, then reduced the loss to 7%. Stocks, which are often volatile and popular with retail investors active in Reddit’s Wall Street Bets community, have skyrocketed this year, from nearly $ 19.
Jefferies serves as the sales agent, according to the filing. GameStop said it aimed to use the net proceeds from any stock sales “to further accelerate its transformation as well as general corporate purposes and further strengthen its balance sheet.”
The company recently said that Ryan Cohen, GameStop’s largest individual shareholder and co-founder of pet retailer Chewy, will lead a committee focused on the retailer’s turnaround. Cohen has previously overseen changes to the company’s executive suite and wants GameStop to focus on e-commerce rather than physical stores.
Separately on Monday, GameStop said preliminary global sales in the first nine weeks of fiscal 2021 were up about 11% from the previous year period.
He said its operations in 14 countries have been affected by temporary store closures and other government-imposed restrictions due to the COVID-19 pandemic. Operations were limited primarily in Europe, “and the company operated with an approximately 13% decrease in the number of stores due to its strategic store optimization efforts.”