GameStop (NYSE: GME) stock surged during pre-market trading Tuesday after the retail trader favorite raised nearly $1 billion from a share sale.
GameStop (GME), the struggling video game retailer, announced on Friday that it has raised nearly $933.4 million by selling 45 million shares. The company is strategically improving its finances to adapt to the growing consumer shift towards e-commerce.
The share sale, disclosed earlier this month, was part of an “at-the-market” offering, meaning the shares changed hands at prevailing market prices rather than a pre-determined rate. This approach allowed GameStop to capitalize on the recent surge in its stock price, driven by a renewed wave of interest from retail investors.
Keith Gill, known online as “Roaring Kitty,” reignited the renewed enthusiasm for GameStop shares with his return. The bullish perspective on the company by Gill had previously ignited the infamous meme stock rally in January 2021. Retail investors found renewed vigor from his reappearance on social media, leading to a more than fourfold increase in the GameStop stock from the end of April through May 14. However, by the close of trading on Friday, the stock had given back approximately 60% of those gains, ending at $19.00 per share.
While GameStop did not disclose the price at which the shares were sold, Reuters calculations suggest an average price of $20.74 per share. The company plans to use the proceeds from this sale for general corporate purposes, which may include acquisitions and investments.
GameStop: Ongoing Challenges and Future Outlook
Despite the recent capital raise, GameStop continues to face significant hurdles. The company relies heavily on its brick-and-mortar stores, and it has struggled as more consumers opt to purchase video games and collectibles online. Reflecting these challenges, GameStop has forecasted a decline in first-quarter net sales, projecting between $872 million and $892 million, down from $1.24 billion in the same period a year ago.
The share sale by GameStop follows a similar move by AMC Entertainment (NYSE: AMC), another retail favorite, which recently concluded a $250 million “at-the-market” share sale program. These developments underscore the dynamic nature of retail investing and the strategic responses adopted by companies to address market conditions and capitalize on investor sentiment.
GameStop (NYSE: GME) Stock Movement
As of 07:19 a.m. (Eastern Time) Tuesday, GME stock traded at $23.68, marking a 24.32% increase compared to the previous trading session.
