GameStop plans $1 billion inventory sale, shares slide By Reuters

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© Reuters. FILE PHOTO: US dollar bills appear in front of the GameStop logo that appears

By Uday Sampath Kumar

(Reuters) – GameStop Corp. (NYSE 🙂 Stocks fell 12% on Monday after the video game retailer announced it was selling up to $ 1 billion in shares as it benefited from a dizzying rally in its stocks this year on a Reddit-fueled retail frenzy .

The company announced it will sell up to 3.5 million shares and use the proceeds to accelerate the transition of its business model to e-commerce, led by top shareholder and board member Ryan Cohen.

At the closing price of $ 191.45 on Thursday, GameStop’s at-the-market sale could bring in up to $ 670 million. However, the company is not required to sell stocks at that value, as customary programs allow companies to sell stocks over an extended period of time.

GameStop’s stock is up more than 900% so far this year, giving the company a valuation of up to $ 34 billion at a time when retailers are betting against Wall Street hedge funds that cut their shares.

Cinema operator AMC and airline operator American Airlines (NASDAQ :), which also benefited from the Reddit-fueled trading frenzy in January, were able to sell shares, but GameStop was unable to due to regulatory restrictions.

GameStop cautioned investors that buying shares in its offering could result in a “significant” loss if the price of its stock declines.

The new prospectus, which was filed with the US Securities and Exchange Commission, replaces one from December in which GameStop registered the sale of shares valued at $ 100 million. The company said it did not sell any shares in the December prospectus.

According to GameStop, Jefferies (NYSE 🙂 LLC is acting as the commercial agent for the new offering with a commission of up to 1.5% of the gross selling price per share.

Regardless, GameStop said global sales increased about 11% for the nine-week period ending April 4.

Shares fell to $ 168.76 before trading.

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