GameStop Corp shares fell 12% on Monday after the video game retailer said it may sell up to $1 billion worth of stock as it takes advantage of a dizzying rally in its shares this year on the back of a Reddit-driven retail trading frenzy.
The company said it would sell up to 3.5 million shares and use the proceeds to speed up the shift in its business model to e-commerce in an overhaul being led by top shareholder and board member Ryan Cohen.
At Thursday’s closing price of $191.45, the “at-the-market” sale could fetch GameStop up to $670 million. The company, however, is not obligated to sell shares at that value since at-the-market programs allow companies to sell stock over a prolonged period of time.
GameStop’s stock has gained more than 900% so far this year, giving the company a valuation of as much as $34 billion at one point as retail traders bet against Wall Street hedge funds that had shorted its shares.
GameStop said Jefferies LLC is acting as its sales agent for the new offering at a commission of up to 1.5% of the gross sales price per share.
Separately, GameStop said global sales for the nine-week period ending April 4 rose about 11%.
Its shares were down at $168.76 in premarket trading.
Source: Reuters
