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GameStop surges after fetching US$933M from stock sale

A GameStop sign is displayed above a store, Jan. 28, 2021. (AP Photo/Charlie Neibergall, File) A GameStop sign is displayed above a store, Jan. 28, 2021. (AP Photo/Charlie Neibergall, File)
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GameStop made nearly US$933.4 million by selling 45 million shares, the struggling videogame retailer said on Friday, sending its shares up more than 12 per cent after the bell.

The company largely relies on brick-and-mortar stores and has been grappling with customers turning to e-commerce firms for buying video games and collectibles.

It had disclosed its share sale plan earlier this month amid a retail buying frenzy sparked by the return on social media of "Roaring Kitty" Keith Gill, whose bullish calls on the company spurred the 2021 meme stock rally.

The deal was structured as an "at-the-market" offering, in which shares are sold at the prevailing market price instead of a pre-determined one.

The rally in the shares of GameStop, which has become a poster child of the retail mania, began after Gill shared a meme and several video clips from movies.

The stock more than quadrupled from the end of April through May 14, and then gave back about 60 per cent of that gain, as of Friday's close.

GameStop did not disclose the price at which it sold the shares, but based on Reuters calculations, they were sold at an average price of US$20.74 each. Its shares were currently trading at US$21.93.

The company said it will use the proceeds from the sale for general corporate purposes, which may include acquisitions and investments.

GameStop last week said it expects its first-quarter net sales to drop to between US$872 million and $892 million, compared with $1.24 billion a year earlier.

Theatre chain AMC, another retail darling, had also completed a US$250 million "at-the-market" share sale program last week.

(Reporting by Jaspreet Singh and Niket Nishant in Bengaluru; Editing by Arun Koyyur)

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