GameStop stock tanks as retailer reveals plans of a stock sale

on May 17, 2024
  • GameStop Corp filed to sell an additional 45 million shares on Friday.
  • $GME says its Q1 sales will come in lower than previously anticipated.
  • GameStop stock opened about 20% down following the news today.

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GameStop Corp (NYSE: GME) opened about 20% down on Friday after filing to sell additional shares in an at-the-market offering. 

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How many shares does $GME plan on selling?

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The video gaming merchandise retailer plans on offering 45 million shares in total. What it plans on doing with the proceeds, however, remains unclear. 

$GME is opting for a stock sale shortly after a brief return of the meme stock craze that saw its shares trade at a high of about $65. But they crashed sharply after the short squeeze and are now trading at $22 and change. 

The massive gain in GameStop stock that lasted hardly for a day materialised after Keith Gill or “Roaring Kitty” made a post on X for the first time since 2021. 

Gill is broadly known as the pioneer of the meme stock phenomenon. 

Why else is GameStop stock down on Friday?

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The plan of a share sale is bad news for $GME stockholders as it will dilute their stake in the $6.5 billion company based out of Grapevine, Texas. 

Note that Wedbush Securities analyst Michael Pachter continues to see downside in GameStop stock to about $5.60. His recent research note reads:

We expect them to lose $100 million a year going forward. It’s a race to see if they can close stores fast enough to limit losses, but they have no plan that would suggest they can grow revenue or profit.

Shares of the retail firm are down today also because its management now sees revenue to fall between $872 million and $892 million in the first financial quarter as Invezz reported here. Analysts, in comparison, were at about $1.0 billion. 

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