Key Insights
- GameStop raised $2.14 billion in a recent stock sale, taking advantage of a revived meme rally sparked by the return of trader Roaring Kitty.
- The video game retailer sold 75 million shares at an average price of around $28.50 per share.
- The funds will be used for general corporate purposes, potential acquisitions, and investments.
NEW YORK (MarketsXplora) – GameStop Corp (GME.N) said on Wednesday it had raised more than $2 billion through an at-the-market stock offering, capitalizing on a renewed surge in its share price fueled by the return of influential trader Keith Gill.
The video game retailer sold the maximum 75 million shares allowed under the offering at an average price of around $28.50, according to Wedbush Securities analyst Michael Pachter’s estimates.
The $2.14 billion in proceeds will be used for general corporate purposes as well as potential acquisitions and investments, GameStop said.
GameStop shares extended a roller-coaster ride this week, rising 8% so far after plunging 40% on Friday when the company pre-released disappointing first-quarter earnings that showed a 29% sales decline.
The stock sell-off coincided with the comeback livestream of Keith Gill, better known as Roaring Kitty, whose prolific posts helped spark last year’s Reddit-driven trading frenzy that sent GameStop shares soaring.
In his first YouTube stream in years, Gill reiterated his belief in GameStop’s long-term value but revealed little new information and no institutional backing for his bullish positions.
Gill disclosed holding 120,000 call options on GameStop shares that he must decide whether to exercise by their June 21 expiration date.
The company’s $2.1 billion cash haul showed it moving swiftly to capitalize on renewed interest from small investors behind the meme-stock craze.
Yet GameStop faces an uncertain turnaround after being battered by video game downloads and competition from bigger retailers offering online distribution.
Wedbush’s Pachter has an “underperform” rating on the stock and a $11 price target, over 60% below its latest close of $30.53 on Wednesday.
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