• GameStop raised more than $2 billion by selling 75 million shares, capitalizing on the recent meme stock frenzy
• The video game retailer completed an at-the-market equity offering, selling the maximum allowed 75 million shares to raise $2.14 billion in proceeds
• GameStop intends to use the funds for general corporate purposes, which may include acquisitions and investments
GameStop took advantage of a revived meme rally and raised over $2 billion by selling 75 million shares in a recent stock offering. The video game retailer was able to capitalize on the meme frenzy sparked by the return of popular trader Roaring Kitty.
Details of the Stock Offering
On Tuesday evening, GameStop announced that it completed an at-the-market equity offering, selling the maximum number of 75 million shares. This raised total proceeds of $2.14 billion for the company.
GameStop said it intends to use the money raised for general corporate purposes. This could include acquisitions and investments to further grow the business.
The stock rose slightly in morning trading on Wednesday after the announcement. The shares continued their roller-coaster ride this week, up 8% so far.
Roaring Kitty’s Influence on the Meme Rally
According to Wedbush analyst Michael Pachter, the average share price of the offering was around $28.50. This implies the sale coincided with the big sell-off during Roaring Kitty’s YouTube livestream last Friday.
Roaring Kitty, also known as Keith Gill, hosted his first livestream in years that day. This seemed to exacerbate the sell-off, with GameStop shares dropping 40% on Friday after the company released its earnings report early.
In the livestream, Gill reiterated his previous investing thesis in GameStop but offered little new reasoning. He revealed he did not have any institutional backers and his posted GameStop positions were his only bets.
Gill owns 120,000 call options on GameStop stock. He has some tough choices to make before their expiration date on June 21.
Pachter maintains an “underperform” rating on GameStop with a 12-month price target of $11, more than 60% lower than Tuesday’s close.
GameStop Looking to Take Advantage
The recent stock offering allows GameStop to capitalize on the renewed meme frenzy. Even with the polarized opinions on fair valuation, the company can raise significant funds quickly when its shares experience a jump in trading.
GameStop now has over $2 billion in fresh capital to deploy for acquisitions, investments, and general operations. It remains to be seen how management decides to use the new influx of cash. But the offering gives the retailer more flexibility during a transformative period for the company.
