GameStop Issues New Shares, Sending Stock Tumbling
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Key TakeawaysGameStop stock is tumbling Friday as the retailer filed to issue up to 45 million new shares.The company also announced initial projections for its first-quarter results, which came in below analyst estimates.The meme stock has erased nearly all the massive gains it recorded earlier this week.
GameStop (GME) shares are tumbling 25% in intraday trading Friday after the gaming retailer announced plans to issue up to 45 million new shares and released initial estimates for its first-quarter financial performance below expectations.GameStop plans to sell up to 45 million new shares of its common stock, the company said in a filing with the Securities and Exchange Commission (SEC) Friday. The new sale will bring GameStop’s total shares on the market to about 351.19 million.GameStop said in the filing it will use the proceeds from the sale for “general corporate purposes” like investments and acquisitions. At its share price Friday morning, the stock sale could net GameStop just under $1 billion.Q1 Projections Below EstimatesGameStop also released first-quarter preliminary results Friday. The retailer guided net sales of $872 million to $892 million for the 13 weeks through May 4, below analyst projections of $1 billion, according to estimates compiled by Visible Alpha. GameStop also expects to post a larger net loss than estimates, from a range of $27 million to $37 million, mostly wider than the $30.6 million analysts predict.GameStop’s Roller-Coaster WeekThe one-time meme stock has been on a wild ride of highs and lows this week, more than doubling in value over Monday and Tuesday following the Sunday evening online return of Keith Gill, also known as “Roaring Kitty,” one of the key figures in the first meme stock craze of 2020 and 2021.After closing last week at $17.46, GameStop gained 74% Monday to $30.45, and another 60% Tuesday to $48.75, for a combined two-day gain of 179%.However, GameStop shares reversed course Wednesday and Thursday, falling 19% and 30%, respectively, with Friday morning’s news sending shares down even further.As of 11 a.m. Friday, shares were down 25% to $20.74, now just 19% above where the stock closed last week. Read the original article on Investopedia.
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