GameStop shares drop as much as 14% after Reddit-powered name plans to sell $ 1 billion in shares
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GameStop shares fell double digits at one point on Monday after the video game retailer announced it was selling up to $ 1 billion in additional shares after a historic Reddit short squeeze.
GameStop’s stock fell 14% to around $ 164.81 apiece after announcing a stock offering of up to 3.5 million shares. The stock recently traded 4% at $ 183 per share. The company intends to use the proceeds to further accelerate its e-commerce transformation as well as for general corporate purposes and to further strengthen its balance sheet.
The offer is seen as a way for the retailer to capitalize on its recent staggering rally, sparked by a group of Reddit-obsessed retailers aiming for sharply shortened stocks. GameStop rose 400% to over $ 400 per share in a week in January.
Earlier in the year, GameStop, a brick and mortar retailer, was listed at less than $ 20 per share.
GameStop is in the midst of a technology and e-commerce transition led by activist investor and board member Ryan Cohen, the co-founder of Chewy. The company hired former Amazon and Google CEO Jenna Owens as its new chief operating officer.
In a separate release on Monday, GameStop announced that total global revenue in the first nine weeks of fiscal 2021 was up approximately 11% year-over-year. In the five-week period ending April 2, total global sales increased 18% year over year.
Two weeks ago, the company reported worse-than-expected fourth-quarter results that were missed in the upper and lower ranges. However, GameStop announced that e-commerce sales grew 175% in the most recent quarter, accounting for more than a third of sales for the period.