Sun. Jul 14th, 2024

GameStop raises more than $2 billion by selling 75 million shares, capitalizing on meme frenzy

Merchandise lines the shelves of a GameStop store on May 28, 2024 in Miami, Florida. 

Michael Nagle | Bloomberg | Getty Images

GameStop raised more than $2 billion in a recent stock sale as the video game company took advantage of a revived meme rally sparked by the return of trader Roaring Kitty.

The retailer announced Tuesday evening that it completed an at-the-market equity offering, selling the maximum number of 75 million shares to raise proceeds of $2.14 billion. GameStop said it intends to use the money for general corporate purposes, which may include acquisitions and investments.

The stock rose slightly in morning trading Wednesday. The shares continued their roller-coaster ride this week, up 8% so far.

Wedbush GameStop analyst Michael Pachter estimated that the sale had an average share price of $28.50, implying that it coincided with the big sell-off during meme stock leader Roaring Kitty’s Youtube livestream last Friday.

GameStop shares dropped 40% on Friday after the company released its earnings report days ahead of schedule, disclosing that sales declined 29% in the first quarter.

Roaring Kitty, aka Keith Gill, hosted his first livestream in a few years that day, which seemed to exacerbate the sell-off. Gill reiterated his previous investing thesis and offered little new reasoning behind his large stake. He revealed that he did not have any institutional backers and the GameStop positions he had shared in screenshots were his only bets.

Gill owns 120,000 call options against GameStop and he has some tough choices to make before expiration date on June 21.

Pachter has an underperform rating on GameStop and a 12-month price target of $11, which is more than 60% lower than Tuesday’s close of $30.49.

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