GameStop announced a new primary share offering of 45 million shares at the market price and guided lower Q1 results, while shares finished the week higher after a 26% Friday drop, helped by activity around roaring kitty.
GameStop shares will still close the week’s trading substantially higher than they began it, despite a 26% drop on Friday triggered by an opportune share sale and a reminder of the retailer’s actual financial performance.
Capitalising on recent share price strength, GameStop is now planning to sell another 45 million shares as it launches a new primary share offering priced “at the market”.
At $20.50 per share, GameStop was down $7.20 or 26% as the company's bankers set about marketing the stock.
At the same time, GameStop told investors it expects to report a decline in first-quarter sales.
It means new guidance is pitched in a range between $872 million and $892 million, a sharp decline from the $1.24 billion achieved for the same quarter last year. The retailer added that its net loss for the quarter would be between $27 million and $37 million, compared to a $50.5 million loss for the same period a year ago.
GameStop’s struggles have come amid rising e-commerce competition, the rise in direct digital game sales on consoles and PCs, and, in response management has been pushing cost-cutting programs and job cuts.
It’s a predicament that is at the core of the ‘bear’ case that’s led Wall Street institutions shorting GameStop shares – a trading call that’s been punished by the so-called “short squeeze” by retail investors for the second time since 2021.
Earlier this week, GameStop shares had surged following posts from the long-dormant account of “Roaring Kitty,” also known as Keith Gill, the key figure in the 2021 meme stock phenomena that last saw GameStop shares racing higher.
