GameStop has announced it may sell up to 3.5 million shares of the company and use the proceeds to "further accelerate" its transformation to become a more successful business.
The store announced on Monday that it might sell up to 3.5 million common stock shares through what's known as an "at-the-market" equity offering. This could generate hundreds of millions of dollars for the retailer based on the latest stock prices for GameStop.
Whatever money GameStop makes from any potential stock transactions will go toward accelerating the company's "transformation" plan. The money will also be used for "general corporate purposes" and for "further strengthening" its bottom line overall.
As for when the sale might happen, GameStop said the "timing and amount of any sales will be determined by a variety of factors considered by the Company."
GameStop is working with Jefferies LLC on any potential sale. "Sales may be made at market prices prevailing at the time of a sale or at prices related to prevailing market prices. As a result, sales prices may vary," GameStop said.
Whatever the case, this is a big deal in GameStop's history books because it seems to represent the first time that the store is attempting to cash in on the Reddit madness that catapulted GameStop's share price to new heights in recent weeks and months. Although GameStop's share price has dropped from highs of around $500, it's still trading at close to $200, which is up massively from a year ago when it was about $5.
This kind of equity move is precisely what many were expecting GameStop to do at some point to raise cash to fund its efforts to become a successful company again.
A report from February said GameStop explored the possibility of a share buyback earlier this year but, because GameStop was in the middle of a fiscal quarter and hadn't yet been able to report financial results for the period, it couldn't or wouldn't do so due to SEC regulations. GameStop has now filed its latest earnings release, which apparently clears the way for this kind of equity program to come to fruition.
GameStop has big plans to turn things around, and this buyback could help give the company the cash it needs to execute on its strategy. The retailer recently hired a "Growth Officer" whose job it will be to oversee GameStop's transition. GameStop also just hired new brand development and merchandising executives to help with this move.
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