• GameStop raised $2.1 billion by selling 7.5 million new shares to investors
• The video game retailer plans to use the funds for general corporate purposes and potential acquisitions
• GameStop’s stock has been volatile recently due to interest from “meme stock” traders like Keith Gill (Roaring Kitty)
GameStop recently raised $2.1 billion by selling new shares to investors, capitalizing on the recent surge in its stock price driven by retail traders. The struggling video game retailer plans to use the funds for potential acquisitions and other corporate purposes as it attempts to pivot its business model.
GameStop Sells New Shares at Premium Price
GameStop sold 75 million new shares at an average price of $28.24 each, according to Wedbush Securities. This share sale comes just weeks after GameStop raised $1.13 billion by selling 5 million new shares in April.
Despite the new cash injection, GameStop shares have been volatile. The stock fell in trading after the latest share sale was announced.
Keith Gill Fuels Rally in GameStop Stock
The GameStop stock surge is partly attributed to Keith Gill, an online trader and personality known as “Roaring Kitty” and “DeepF***Value.” Gill recently revealed he owns about $7.8 million worth of GameStop shares.
Last week, Gill live streamed on YouTube and discussed his bullish outlook on GameStop’s efforts to shift its retail stores to a streaming business model. Gill’s social media activity has helped drive interest in the stock among retail investors.
GameStop Continues to Lose Money
While GameStop is raising billions through stock sales, the company continues to lose money. Last week GameStop reported a $66 million first quarter loss on declining hardware, software and collectibles sales.
GameStop faces challenges as it attempts to reinvent itself in the digital gaming age at a time when its core business model of selling physical video games in stores is declining. The influx of new cash will allow GameStop to fund its transformation.
Conclusion
Meme stock traders have bid up GameStop’s share price, allowing the company to raise over $3 billion in recent stock sales. GameStop aims to leverage these funds to acquire other companies and transform into a digital gaming and ecommerce business. However, it remains to be seen if GameStop can successfully execute this strategic pivot.
