GameStop May Sell up to 5 Million new Shares
GameStop reported quarterly results that surpassed expectations on Wednesday. In a quarterly report released by the company, GameStop said it may sell up to 5 million new shares, which would be worth more than $1 billion based on its price in after-hours trading. The latest announcement of a potential share sale follows the sale of 3.5 million shares in April, which raised $531 million.
Its stock dropped 9% on Wednesday. BlackBerry, AMC Entertainment, as well as other recently surging so-called “meme” stocks, fell in extended trade on Wednesday.
The company made another important announcement on Wednesday. The company named a former head of Amazon’s Australian business as its chief executive. Matt Furlong, who used to work for Amazon, will succeed George Sherman as chief executive officer. Another former employee of Amazon Mike Recupero will succeed Jim Bell as chief financial officer.
Matt Furlong will join the company on June 21, while Mike Recupero will come on board on July 12. The news comes only a few hours after shareholders elected Ryan Cohen, the company’s major stockholder as its chairman. The company announced his nomination in April.
GameStop and interesting details
Supported by a cult following of individual investors, the company’s volatile shares doubled in the past month. Shares of GameStop are approaching their high in January. That was when a huge surge driven by investors on Reddit’s wallstreetbets trading forum made the company’s stock the most traded on the U.S. market for several days. The company remains one of the most discussed stocks on the forum.
GameStop said it received a request from the Securities and Exchange Commission (SEC) for documents. The SE also requested the information related to the investigation into that trading, along with trading in shares of other companies.
The company said its net sales for the quarter which ended on May 1, jumped 25% to $.128 billion. GameStop’s adjusted loss per share was 45 cents, surpassing expectations of an 84 cent loss per share.
GameStop is struggling to deal with a serious issue. Its core business of selling new and pre-owned video game discs is shrinking as users prefer to use other options. The company lost money for the past three years, and this fact underlines the severity of the situation.
Ryan Cohen hopes to transition GameStop into an e-commerce business that will be able to compete with big-box retailers.
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