GameStop’s (NYSE:GME) at-the-market (ATM) offering is here and it really shouldn’t surprise anyone given the recent surge in shares. Offering the same dollar amount of shares at a higher price will result in less dilution when compared to offering shares at a lower price.
GameStop last sold 45 million shares worth $933.4 million after making an announcement on May 17. Now, the video game retailer wants to sell up to another 75 million shares.
“We intend to use the net proceeds of this offering, if any, for general corporate purposes, which may include acquisitions and investments in a manner consistent with our investment policy,” said GameStop. “There are no current plans, commitments or arrangements to make any acquisitions or investments.”
The proceeds could also go toward short-term interest-bearing securities.
GME Stock: GameStop Files to Sell Up to 75 Million Shares, Reports Earnings
GameStop also reported its first-quarter earnings, surprising shareholders. That’s because the company had previously announced that it would report earnings on June 11 after the market close, not today.
During the quarter, GameStop’s revenue plunged by 28.7% to $882 million. Two analysts who cover the company were expecting revenue between $900 million and $1.09 billion. On top of that, GameStop failed to turn a profit with a net loss of $32.3 million, which improved from a loss of $50.5 million a year ago.
As of March 31, GameStop had $1.08 billion in cash, cash equivalents and marketable securities. Adding the $933.4 million raised in the last offering gets us to almost $2 billion. Offering another 75 million shares at, let’s say $35, would bring the company another $2.6 billion in gross proceeds. With such a large cash balance, GameStop will be very flexible in completing its business objectives.
Meanwhile, GME has a major catalyst coming up today, as Roaring Kitty has scheduled a livestream for 12:00 PM Eastern today. As of yesterday’s close, his position in the company was worth a staggering $557 million, according to a Reddit post from an account associated with him. $232.75 million is in shares while the remaining $324.30 million is in $20 calls expiring on June 21.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
