TLDR
- GameStop raised approximately $2.14 billion through an at-the-market equity offering, selling the maximum 75 million shares registered under the program at an average price of around $28.50 per share.
- The company plans to use the proceeds for general corporate purposes, including potential acquisitions and investments.
- GameStop’s stock surged 22.8% on Tuesday after experiencing significant losses in the previous two trading sessions.
- Meme stock influencer Keith Gill, known as Roaring Kitty, has been active on social media, poking fun at his own paper losses and the ongoing developments surrounding GameStop.
- Analysts have noted short squeeze activity in GameStop’s stock, likely contributing to the rapid price increase as short sellers are forced to buy shares to cover their positions.
GameStop, the video game retailer at the center of the meme stock frenzy, has seen a rollercoaster ride in its stock price over the past week.
The company announced on Tuesday that it had completed an at-the-market equity offering, raising approximately $2.14 billion in gross proceeds. The successful share sale comes just days after the return of meme stock influencer Keith Gill, known as Roaring Kitty, who hosted his first livestream in three years.
GameStop sold the maximum 75 million shares registered under the program at an average price of around $28.50 per share, according to Reuters’ calculations.
The company intends to use the net proceeds from the offering for general corporate purposes, which may include acquisitions and investments. This significant influx of cash has bolstered GameStop’s financial position, increasing its cash reserves to over $4 billion.
The news of the completed share offering, along with shifting market sentiment, contributed to a remarkable turnaround in GameStop’s stock price on Tuesday.
After experiencing two consecutive days of significant losses, with the stock plummeting more than 8% in early trading, GameStop shares closed the day up 22.8%. This impressive recovery was met with a mixture of surprise and enthusiasm across social media and trading platforms, with over 136 million shares traded on the day.
Roaring Kitty, the key figure behind the eye-popping rally in GameStop’s stock in 2021, has been active on social media throughout the recent developments.
Despite losing around $350 million on his GameStop position from last Thursday through Monday, Gill has maintained a lighthearted approach, sharing memes and poking fun at his own paper losses.
— Roaring Kitty (@TheRoaringKitty) June 10, 2024
In his livestream on Friday, which attracted more than 600,000 viewers, Gill wore fake bandages and had his arm in a splint while acting injured as the stock price fell in real-time.
Analysts from S3 Partners have noted significant short squeeze activity in GameStop’s stock, which has likely fueled the rapid price increase.
A short squeeze occurs when investors who have bet against the stock are forced to buy shares to cover their positions, driving the price up further. This phenomenon, combined with the renewed interest from retail investors following Roaring Kitty’s return, has contributed to the stock’s revival.
The broader market trends have also played a role in GameStop’s stock movements.
Wall Street traded relatively flat on Tuesday as investors exercised caution in anticipation of the upcoming inflation report and the Federal Open Market Committee (FOMC) meeting on Wednesday.
While the S&P 500 experienced its poorest daily performance so far this month, down about 0.2%, the tech-centric Nasdaq 100 remained stable, supported by a robust surge in Apple following Monday’s reveal of its new AI offerings.
