GameStop has announced plans to try and cash in on its Reddit-driven stock roller coaster by selling $1 billion of additional shares.
The struggling video game retailer became the centre of a battle between amateur investors and Wall Street short sellers earlier this year, sending its share price skyrocketing over 1000 per cent.
On Monday, GameStop said that it plans to sell up to 3.5 million shares over time, aiming to raise around $1 billion to fund its digital transformation.
The news sent its shares dropping 19 per cent, before recovering to around $187 throughout the day thanks to news that it had finally begun to recover from a pandemic driven sales slump.
It reportedly plans to sell shares in an ‘at the market offering’, which involves a broker gradually selling them off over time.
At its current price this would see GameStop net around $650 million, but the retailer said it would raise a maximum of $1 billion should its share prices skyrocket once again.
In January, GameStop’s share price stood at around $17 reflecting years of declining sales even before the pandemic.
However, an army of amateur traders seeking to take on short sellers who had taken a position against the company drove the stock price up to highs of $483 in January, with its price remaining volatile ever since.
Separately, GameStop revealed on Monday that in the nine weeks to April 3 sales had risen 11 per cent year-on-year, helping its share prices recover from the initial slump.
“During the first quarter of fiscal 2020 and due to the spread of Covid-19 around the world, the company’s various operations across 14 countries were negatively impacted due to temporary store closures and other government-mandated restrictions that resulted in limited operations,” it said in a statement.