Dive Brief:
- GameStop on Friday said in a filing with the U.S. Securities and Exchange Commission that it plans to sell up to an additional 75 million shares of stock through an at-the-market offering. The additional sale comes after the retailer in May raised $933.4 million by selling 45 million shares in a similar offering.
- The company on Friday also reported its first-quarter results. Net sales fell 29% to $882 million, down from $1.24 billion last year. GameStop’s Q1 operating loss was $50.6 million, down from $58.4 million a year ago. Its net loss was $32.3 million, down from $50.5 million a year ago.
- GameStop also said its selling, general and administrative expenses were $295.1 million, representing 33.5% of net sales. Last year, GameStop’s first quarter SG&A was $345.7 million or 27.9% of net sales. The earnings results are in line with preliminary numbers the company announced last month when it first disclosed the stock sale plans.
Dive Insight:
GameStop is looking to cash in again on its meme stock status, with a new stock sale of up to 75 million shares. The company, which did not hold an earnings call, has $14.9 million in debt and $1 billion in cash and cash equivalents.
GameStop said it plans to use the net proceeds of the stock sales “for general corporate purposes, which may include acquisitions and investments in a manner consistent with our investment policy. There are no current plans, commitments or arrangements to make any acquisitions or investments.”
In a Friday regulatory filing, GameStop said its stock price closed on Thursday at $46.55 per share. It had fallen to about $37 as of mid-morning Friday following multiple temporary pauses in trading in response to extreme price changes, according to New York Stock Exchange data.
In one of its latest regulatory filings, GameStop acknowledges the recent volatility of its stock price and notes that uncertainty may continue “due to numerous circumstances beyond our control.” Those factors include “comments by securities analysts or other third parties, including blogs, articles, message boards and social and other media;” the influence of large stockholders; and new product releases.
GameStop’s meme stock status, when social media-driven speculative interest drives share prices over their true market value, is partly thanks to the social media influence of investor Keith Gill, who reports have identified as a key driver behind the company’s stock fluctuations in recent years.
“The investor base is certainly energized by Keith Gill’s (Roaring Kitty’s) scheduling of a YouTube live stream today at noon ET,” Michael Pachter, managing director of equity research at Wedbush, told Retail Dive in a Friday email. “The stock popped yesterday when he announced that a live stream would happen today, and the company clearly took advantage of the spike to put another stock sale in place.”
Pachter previously said GameStop is likely to face continued retail pressure as consumer electronics migrate online.
