GameStop experienced a 14% surge on Tuesday after the struggling video game retailer announced it had raised $933 million by taking advantage of a rally in the meme stock earlier this month.
In the first two weeks of May, GameStop’s shares increased nearly sixfold, partly driven by the reappearance of “Roaring Kitty” Keith Gill, a significant figure in the 2021 retail trading frenzy. However, the stock has since lost 70% of its value, bringing GameStop’s market capitalization to $5.82 billion as of Friday’s close.
The company reported raising $933.4 million after completing its previously disclosed offering of 45 million shares. It plans 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 projected its first-quarter net sales to fall to between $872 million and $892 million, down from $1.24 billion a year ago.
Tuesday’s stock move could negatively impact short sellers of the company’s shares, who bet on the stock’s decline. According to Ortex Technologies, about 20.5% of GameStop’s publicly available shares were in a short position.
AMC, another meme stock, also completed a $250 million “at-the-market” share sale program this month.
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