GameStop is finally cashing in on the Reddit stock frenzy
The video game retailer announced Monday it planned to sell up to 3.5 million shares. It did not give a precise timeline for the sale, noting the final amount and timing “will be determined by a variety of factors.”
GameStop shares opened at $171 on Monday, and while they are still below Friday’s close, they were up to $183 by midmorning (putting the potential cash raise at $640.5 million). Even if the stock falls as low as $150, though, that would bring in $525 million in additional revenue.
That would nearly double the company’s cash on hand, which stood at $635 million at the end of 2020.
Should the r/WallStreetBets community send the stock on another ride to the moon, GameStop said it will not sell more than 3.5 million shares—and “aggregate gross proceeds will not exceed $1 billion.”
Investors and analysts have openly wondered why GameStop has been hesitant to take advantage of its stock surge. AMC did not show the same hesitation when the interest of Reddit traders caused that stock to rally. The movie theater chain raised $304.8 million by selling shares during that period.
GameStop has steadfastly refused to address the rise, even going as far as declining to take analyst questions during its fourth quarter earnings call and not mentioning the stock rise in prepared comments.
The money raised during the stock sale will be used to accelerate the company’s ongoing transformation, the company said. Chewy founder and GameStop board member Ryan Cohen has increasingly been taking a leadership position in the company, bringing several former Chewy employees on board and heading a new committee that’s overseeing strategic planning.
GameStop CEO George Sherman has been quiet, aside from the prepared comments on the earnings call. To date, the company has not filed any notice with the SEC that he has sold or plans to sell any of his stock holdings, which at one point were worth somewhere in the neighborhood of $1 billion.
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