GameStop Corp (NYSE: GME) expressed plans of a £720 million share sale on Monday to benefit from the Reddit-driven bull run that started earlier this year. The news comes two weeks after the video game retailer reported lower than expected sales and earnings in the fiscal fourth quarter.
GameStop shares slid about 10% in premarket trading on Monday. Including the price action, the stock is now trading at £123.34 per share. In comparison, it had started the year 2021 at a per-share price of £12.44. The price action should come in handy if you are interested in investing in the stock market.
GameStop intends to sell about 3.5 million shares
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GameStop said it intends to sell roughly 3.5 million shares. The proceeds from the share sale, it added, will be used to accelerate the company’s shift to eCommerce. GameStop’s top shareholder Ryan Cohen is leading the overhaul. Cohen is also a board member of the video game retailer.
GameStop closed the regular session on Thursday at a per-share price of £138.09. At this price, the Texas-based company could generate £483.26 million. For the share sale, however, GameStop is not constrained to price its shares at £138.09.
The gaming merchandise retailer also warned investors on Monday that in the event of a decline in its stock, participating in the share sale could result in a sizeable loss. GameStop had previously registered with the U.S. SEC (Securities and Exchange Commission) in December to sell shares worth £72.13 million. It, however, did not sell shares under the December prospectus.
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Jefferies will serve as the sales agent for GameStop’s share sale
GameStop also highlighted on Monday that Jefferies LLC will serve as the sales agent for its stock sale. The American multinational independent investment bank and financial services company has agreed to a commission of roughly 1.5% of the gross sales per-share price.
In related news, the U.S. video game retailer also said on Monday that its global sales in the nine weeks that concluded on 4th April posted an 11% increase on a year over year basis. In related news from the United States, investment bank Morgan Stanley said it will raise dividend as soon as the Federal Reserve eases restrictions.
GameStop shares performed massively upbeat in the stock market last year with an annual gain of close to 225%. At the time of writing, the Grapevine-headquartered company is valued at £9.66 billion.