GameStop shares fell after announcing a plan to sell $ 1 billion in stock
Shares of GameStop fell sharply on Monday when the video game retailer announced it could sell additional $ 1 billion worth of shares it seems to take advantage of the Reddit-driven trading craze earlier this year.
The Texas-based company said it could offer and sell up to $ 3.5 million worth of shares, with profits used to “accelerate its transformation” and strengthen its balance sheet.
“The timing and amount of sales will be determined by a number of factors,” GameStop said in a statement.
Shares of the video game retailer fell more than 19 percent in pre-market trading in New York, although most of those losses were recovered in the trading session. GameStop finished the day nearly 3% lower at $ 187.
In January, the company was in the midst of a stock-selling frenzy, led Amateur investors in the US, Which bet on popular stocks like GameStop and Tesla car maker.
A coordinated effort by users of the online Reddit forum raised the stock price of GameStop to a record $ 483 and was designed to turn the screw on short sellers.
In a separate announcement on Monday, GameStop revealed the recovery of its global sales operations, which was disrupted as a result of the pandemic.
In the nine weeks ending April 3 this year, worldwide sales have risen about 11 percent from the same period a year ago, the company said.
“In the first quarter of the 2020 tax year and Covid-19 expanded worldwide, the company’s operations in 14 countries had a negative impact on the closure of temporary stores and other government-mandated restrictions resulted in limited operations,” GameStop said.
The shopkeeper reported in March that this was the case He named Jenna OwensThe former Amazon and Google executive, who is the new head of operations, is part of a broader shake-up of his leadership team that looks set to lead to a decline in years of sales.
GameStop already considered Ryan Cohen, its largest shareholder and founder of Chewy.com, to direct an expansion of its e-business business.
In the years leading up to the pandemic, GameStop sales fell as the company made efforts to adapt to the newly digitized market, dominated by downloads and free online games to play, and reduced mall traffic.
The move comes from companies from all companies that have rushed to gather equipment markets in recent months. In the first quarter, companies listed on exchanges around the world issued $ 179 billion in new capital, the highest level since 2015, according to Refinitiv data.
“It simply came to our notice then [GameStop] you should have done it a month ago, “said Michael Pachter, an analyst at Wedbush Securities. The issue, he said, should provide the trader with enough money to make investments [Cohen’s] business transformation strategy ”.