By Reuters | Updated: May 29, 2024
May 28 (Reuters) – GameStop (GME.N) jumped 14% on Tuesday after the struggling video game retailer said it had raised $933 million by cashing in on a rally in the meme stock earlier this month.
The company’s shares surged nearly six times their value in the first two weeks of May, partly fueled by the re-emergence of “Roaring Kitty” Keith Gill, a key figure in the 2021 retail trading frenzy. The stock has since lost 70% of its value up to Friday’s close, taking GameStop’s market value to $5.82 billion.
The company said it had raised $933.4 million after it completed its previously disclosed offering for 45 million shares. It intends to use the proceeds for general corporate purposes, which may include acquisitions and investments.
“(GameStop) can take advantage of its share (surge) as long as the price remains elevated and they continue to have an at-the-market on file,” said Art Hogan, chief market strategist at B. Riley Wealth.
“They still have a lot of hurdles to cross before they become something that reflects the kind of price their shares are trading at.”
Earlier this month, GameStop said it expected its first-quarter net sales to drop to between $872 million and $892 million, from $1.24 billion a year ago.
Tuesday’s move could hurt short sellers of the company’s shares, who bet on a stock’s decline.
About 20.5% of GameStop’s publicly available shares were in a short position, data from analytics firm Ortex Technologies showed.
AMC (AMC.N) another meme stock, also completed a $250 million “at-the-market” share sale program this month.
@ Thomson Reuters 2024
