GameStop Raises $551 Million In Trading Frenzy As Shares Skyrocket By 800% This Year Alone
GameStop stonks are back, with the company raising $551 million after selling millions of shares.
Earlier this year, Wall Street was knocked on its backside by Reddit’s army of budding traders, piling money into GameStop (GME) stock to put pressure on hedge fund operators and other financiers who had shorted the stock – aka, they betted against it and would profit from its downfall.
This year alone, GME’s shares are up by 800% – even then, it’s a dramatic stepdown from its stratospheric 9,000% gains when interest hit its peak. Months later, shares are finally being sold.
As reported by Reuters, GameStop sold 3.5 million shares, increasing its stock price by the end of extended trading on Monday, April 26. The ‘aggregate gross proceeds’ amounted to $551 million, as per Barrons, with the average selling price amounting to around $157 per share. Over the course of the day, it leaped 12%, followed by a 10% jump during after-hours trading.
GameStop announced its ‘at-the-market’ equity offering program earlier this month. As explained by Morrison & Forrester, this is an ‘offering is an offering of securities into an existing trading market for outstanding shares of the same class at other than a fixed price on, or through the facilities of, a national securities exchange, or to or through a market maker otherwise than on an exchange’.
Basically, it’s a good way to amass some capital, a goal at the forefront of the firm as it aims to accelerate its shift to ecommerce.
Ryan Cohen, GME’s top shareholder with 13% through RC Ventures, has been pushing the company to move into online shopping since January, looking to compete with the likes of Target and Walmart. Cohen had previous success with Chewy, a pet ecommerce company.
As per Bloomberg, David Cole, an analyst at DFC Intelligence, said, ‘Making a pivot into online retailing is very difficult. However, someone like Cohen — with an aggressive push — is what is needed to have any chance of success.’
It also comes as CEO George Sherman prepares to step down in July this year, with the board searching for someone fit to lead its transformation.
Joseph Feldman, a Telsey Advisory Group analyst, told CNBC, ‘GameStop’s next CEO and CFO are likely to come from the tech industry, as with the other recent senior hires, and would require a wide range of strategic and operational experience, given GameStop’s complex business model, including 4,800 global stores, digital, used games, new software and hardware, and collectibles.’
He added, ‘We continue to believe the current valuation far exceeds our rosy fundamental expectations and projected multi-year benefits from the strategic transformation.’
If you have a story you want to tell, send it to UNILAD via [email protected]
Most Read StoriesMost Read