GameStop raised quite USD 1 billion in its latest stock sale, capitalizing on a newly arrived and fervent army of online investors.
The computer game retailer has taken center stage among a couple of companies that have come to be known this year as meme stocks.
The phenomenon has pitted smaller investors who snaffle shares of beleaguered companies, against large, institutional investors who have shorted shares of these companies, or bet that shares in those companies will fall.
So far, it is the smaller investors that are taking home big gains, though certainly larger and more sophisticated investors have since jumped aboard for the ride.
Shares of GameStop Corp., based in Grapevine, Texas, just outside of Dallas, are up quite 1,000 percent this year. Another meme stock, the movie chain AMC Entertainment, is up 2,300 percent this year.
Before becoming stars in Reddit retail investor chatrooms, both companies were under severe pressure, except for different reasons.
AMC, already wrestling with thin margins, was hammered by a worldwide pandemic that packs up its theaters and flipped the turn on incoming revenue almost overnight.
Problems at GameStop run deeper because technological shifts in gaming have threatened to show it into a relic like another once-ubiquitous chain, Blockbuster Video.
But GameStop is taking full advantage of its surging stock price to boost desperately needed cash. the corporate said Tuesday that it sold 5 million shares within the at-the-market offering, or every share it said that it’d placed on the market.
It was the second cash haul for GameStop this year during the run-up in its stock price.
In April the corporate said that it might sell out to three .5 million shares during a separate offering.
That offering also sold out and it raised about USD 551 million.
Shares of GameStop, which might be had for about USD 20 early this year, we’re selling for on the brink of USD 220 Tuesday after rising another 9 percent at the opening bell on word of the capital raise.
GameStop, in addition to raising capital, is additionally shifting direction during a bid to catch up to the changing technology that threatened the company’s existence, namely that gamers are downloading games instead of buying discs from places like GameStop.
And tons of latest talent has arrived this year to undertake to form that happen.
Ryan Cohen, the co-founder of Chewy, a web pet supply company, revealed that he had compiled a huge stake in GameStop and commenced agitating for change.
Earlier this month, the corporate reshaped its executive leadership team and its board, making Cohen its chairman.
Under new leadership, the corporate is attempting to maneuver aggressively into digital sales and earn a loyal following in ways aside from its stores that had generated enormous revenue for nearly 20 years.