GameStop stock closed almost 23% higher on Tuesday after it revealed that it raised more than $2 billion from its share sale.
The video game retailer had announced Friday, along with its first-quarter earnings, that it would carry out an “at-the-market equity” offering of 75 million shares, meaning the stock was sold at market price. It disclosed Tuesday that it had completed the sale, raking in $2.137 billion in gross proceeds before commissions and offering expenses.
GameStop said it plans to use the net proceeds to for “general corporate purposes,” including acquisitions and investments. Offerings such as this are a popular tool for publicly traded companies looking to raise cash quickly. GameStop reported last Friday that its first-quarter net sales plunged 28% to $881.8 million, from $1.24 billion in the same period last year. It booked a net loss of $32.3 million for the quarter, narrower than its $50.5 million in losses a year ago.
GameStop stock was up about 1% in pre-market trading on Tuesday morning, to $30.84 per share.
The latest meme stock frenzy
When GameStop announced the stock sale last week, it warned that the common price of its stock “has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control,” including short squeezes.
GameStop’s volatility is largely largely due to its status as a so-called meme stock — companies whose shares become wildly popular online and are traded feverishly by retail and individual investors, sending prices soaring regardless of the company’s actual operating results or prospects.
The return last month of Keith Gill, the investor and meme stock booster known by his social media persona “Roaring Kitty,” has turned the company’s stock price into a virtual rollercoaster.
GameStop shares plummeted 40% on Friday after Gill hosted his first YouTube livestream in almost three years, and continued to sink on Monday. The turnaround on Tuesday came at an opportune time for Gill, whose 120,000 GameStop call options expire on June 21.
Gill, who goes by DeepF———Value on Reddit, gained national attention during the COVID-19 pandemic for his bullish analysis of GameStop on Reddit, and drove the first short squeeze of the video game retailer’s stock in early 2021. At the time, its shares surged more than 1,000% in a matter of weeks.
