April 5 (Reuters) – GameStop Corp shares fell 12% on
Monday after the video game retailer said it may sell up to $1
billion worth of stock as it takes advantage of a dizzying rally
in its shares this year on the back of a Reddit-driven retail
The company said it would sell up to 3.5 million shares and
use the proceeds to speed up the shift in its business model to
e-commerce in an overhaul being led by top shareholder and board
member Ryan Cohen.
At Thursday’s closing price of $191.45, the “at-the-market”
sale could fetch GameStop up to $670 million. The company,
however, is not obligated to sell shares at that value since
at-the-market programs allow companies to sell stock over a
prolonged period of time.
GameStop‘s stock has gained more than 900% so far this year,
giving the company a valuation of as much as $34 billion at one
point as retail traders bet against Wall Street hedge funds that
had shorted its shares.
Movie theater operator AMC and airline operator
American Airlines, which also benefited from the
Reddit-fueled trading frenzy in January, were able to sell stock
but GameStop was unable to do so because of regulatory
GameStop warned investors that the purchase of shares in its
offering may result in a “significant” loss if the price of its
The new at-the-market offering prospectus filed with the
U.S. Securities and Exchange Commission replaces one from
December, in which GameStop had registered to sell $100 million
worth of stock. The company said it had not sold any stock under
the December prospectus.
GameStop said Jefferies LLC is acting as its sales agent for
the new offering at a commission of up to 1.5% of the gross
sales price per share.
Separately, GameStop said global sales for the nine-week
period ending April 4 rose about 11%.
Its shares were down at $168.76 in premarket trading.
(Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur
and Saumyadeb Chakrabarty)