GameStop Collapses on Stock Sale Plan Hours Before Gill Stream

(Bloomberg) – GameStop Corp. shares fell after the retailer unexpectedly reported earnings and plans to sell up to 75 million more shares hours before Keith Gill’s highly anticipated return to YouTube, which is attracting speculators.

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The stock had already fallen 31% to $32.03 as more than 150 million shares changed hands, triggering six volatility halts in the first hour. Shares pared losses to 19% ahead of Gill’s YouTube stream.

The video game seller’s first-quarter results, originally scheduled for Tuesday, showed slowing sales and a wider loss than analysts expected. The additional shares, which can be sold in the market at prevailing prices, add to GameStop’s sale of nearly $1 billion in stock last month.

The latest turns extend a volatile four-week period in which GameStop shares have fluctuated between $16.88 and $64.83, although the latest strength has been driven by Gill’s social media posts.

Better known as “Roaring Kitty,” the meme stock influencer returned to X with a cryptic message on May 12. That fueled a 167% rise in GameStop shares through Thursday’s close, adding $11 billion to its market value over that period. On Friday, investors were awaiting Gill’s first livestream in more than three years.

“I expect there to be a binary response to what happens at noon,” said Peter Atwater, an assistant professor of economics at William & Mary. “You’ll either see the crowd dive or jump because the expectations are now such that you either feel frenzy and mania or panic. »

GameStop’s lackluster first-quarter results were revealed last month, on the eve of the company’s decision to sell 45 million shares. This program was also a market offering, in which its investment bank creates shares and sells them at market prices, with the proceeds added to GameStop’s balance sheet.

In a filing detailing its plans to offer up to 75 million additional shares, GameStop indicated that no sales had begun. Based on Friday’s trading, the sale of the full amount could raise about $2.7 billion to go along with the company’s May haul and the $1.08 billion it had in cash and equivalents at the end of the last trimestre.

Some market observers view GameStop’s efforts to raise cash during another stock market frenzy as wise, while others see them as exploitation of existing shareholders. If its bankers sold the entire offering, it would increase the number of shares outstanding by more than 20%, further diluting investors. Such sales also typically put pressure on stock performance in the short term.

For Gill, the latest surge through Thursday’s close strengthened his apparent position in the company to more than $500 million, taking into account common stock and call options, according to a Reddit post on 6 June. His video stream could serve as an additional catalyst for GameStop, like more than 30,000 YouTube users…

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