GameStop Capitalizes on Surge With $1 Billion Share Sale Program

Panorama of a city business district with office buildings and skyscrapers and superimposed data, charts and diagrams related to stock market, currency exchange and global finance. Blue line graphs with numbers and exchange rates, candlestick charts and financial figures fill the image with a glowing light. Sunset light.

(Bloomberg) — GameStop Corp. is set to cash in on its 2021 surge after the company said it may sell up to $1 billion worth of additional shares in one of the largest at-the-market equity offerings ever announced for the retail sector.

The video game retailer erased an early 14% drop to trade down 3% to $185.81 at 11:18 a.m. in New York. Jefferies will manage the offering of up to 3.5 million shares, according to a statement, and proceeds will be used to further accelerate its corporate transformation.

GameStop’s offering plan is ten times larger than one it announced in December with Jefferies, according to data compiled by Bloomberg. However, the potential dilution to shareholders is about the same since the retailer was worth $13.4 billion at Thursday’s close, roughly ten times its value at the end of 2020.

The at-the-market program is also different than traditional secondary offerings as it enables the company to sell shares directly into the open market, allowing it to take advantage of an influx of individual investors.

“It makes sense to convert some of the stock into cash, which could then be used to accelerate the transformation effort,” said Telsey Advisory Group analyst Joe Feldman in an email. “Cash would be a more attractive currency than stock to complete an acquisition to accelerate the transformation.”

Roughly 8.4 million shares changed hands by 11:18 a.m., more than what’s been seen over the past five sessions. Traders will keep a close eye on trading volume this week as the nature of the offering means the company can complete the stock sale at their discretion.

As part of a corporate overhaul spearheaded by activist investor and board member Ryan Cohen, the company has brought in a number of new executives including a chief growth officer and chief technology officer, adding technology experience to its team to help move the company away from its brick-and-mortar business.

Read more: GameStop Adds Another Amazon Executive to Team

In a separate statement on Monday, GameStop released preliminary sales results for the first nine weeks of fiscal 2021. Total global sales increased about 11% from the same period a year ago, jumping 18% in March after a 5.3% rise in February.

GameStop, based in the Dallas suburbs, has suffered with the video-game industry’s shift to online distribution. With gamers downloading more and more — or at least ordering software and gear via e-commerce — there’s less reason to make a trip to a physical store. The company reported disappointing fourth-quarter earnings last month.

Read more: As Meme Stock Mania Fizzles, Wall Street Sees ‘Big Reckoning’

(Updates share price move in the second paragraph and adds more details throughout.)

For more articles like this, please visit us at

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:News