GameStop shares plunge after filing to sell up to 3.5 million shares

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Shares in GameStop Corp. plummeted on Monday after the video game and consumer electronics retailer finally took advantage of the trading frenzy in its shares to raise money through an “on the market” offering. The company said it submitted an application to sell up to 3.5 million common shares from time to time. That represents approximately 5.0% of the 69.9 million shares outstanding as of March 17.

Based on Thursday’s closing stock price of $ 191.45, the offering could raise as much as $ 670.1 million. The company plans to use the proceeds from the offering “to further accelerate its transformation,” as well as for general corporate purposes and to strengthen its balance sheet. The GME share, + 0.86%, fell 13.8% in premarket operations. After rising 5.8% last week, so-called meme stocks have soared 1,002.2% in the last three months through Thursday, and have soared 6,737.5% in the last 12 months. In comparison, the S&P 500 SPX Index, + 1.18% has gained 7.9% the last three months and advanced 61.5% last year. Don’t Miss: Reddit trading guru Keith Gill appears to have made over $ 25 million on his GameStop bet. Separately, GameStop provided preliminary sales results for the first fiscal quarter. Total sales for the nine weeks through April 4 increased 11% over the same period last year. That included a 5.3% increase in sales in February and an 18% increase in sales in March. The consensus of FactSet sales for the first quarter of $ 1.14 billion implies an increase of 11.3% over the previous year. The company said that the restrictions imposed by the government as a result of the COVID-19 pandemic, mainly in Europe, negatively affected the results. The store base for the latest nine-week period decreased 13% from the prior year, due to its “store optimization efforts.”