GameStop Corp said on Tuesday it could sell new shares as a U.S. game dealer. The one who led the Reddit rally of “meme stocks” is looking to benefit from an increase of more than 800% in its prices since January.
Shares of the brick and mortar trader strengthened after hours and ended below 14%, adding to losses of more than 6% during normal trading hours.
GameStop commented on the potential shareholding in fourth-quarter revenue earnings that showed a return on profits, a 175% increase in e-commerce sales.
The company reported a quarterly decline in net sales, missing analysts’ expectations, and a sharp drop in capital.
Shares of Grapevine, Texas-based Texas have risen sharply this year as retailers bet on a Wall Street hedge fund that had reduced stocks. The company’s value has risen to $ 34 billion, in addition to Best Buy Co Inc.
Commercial investors are eagerly awaiting the revenue report and the analysts’ call to arrive at least 45 minutes in advance, forcing some to broadcast the event on YouTube or Twitch.
The popular Reddit Forum for WallStreetBets celebrated GameStop rallies and encouraged each other to hold on to stocks when they went down.
Many at the forum were disappointed after GameStop did not provide an idea to specify its expired rating, and stock losses increased rapidly after the presentation ended.
GameStop administrators did not take questions over the phone.
“Why is everyone disappointed ?,” wrote a Reddit user adithya_chittem. “I truly felt that the foundations were already solid. Why is everyone confused? ”
Many market experts have urged GameStop to use its highly priced stock to sell new shares to support its transformation.
However, the company has decided to ban it under U.S. financial laws. In selling stocks because it has not yet rewarded investors with revenue, Reuters reported last month.
This is despite the fact that GameStop has registered with the US Securities and Exchange Commission (SEC) in December to sell $ 100 million worth of shares (ATMs).
“Since January 2021, we have been exploring whether to increase the size of the ATM system and whether it is possible to sell shares of our Class A Common Stock under an expanded ATM system during the 2021 financial year, in particular to support the acceleration of our future transformation efforts. overall, “said GameStop in the control file.
“‘We were testing whether we would add’ ‘is not a strong statement that they intend to divest any stock, but at least say they are considering doing so,” said Wedbush analyst Michael Pachter, adding that he thinks it is legal advice, and I think they should sell shares at existing levels to tighten. balance. “
Company executives can announce stock offers and allow themselves to reduce cancellations if market reactions are the worst, said Sanjai Bhagat, a Professor of Finance at the University of Colorado.
Top shareholder and board member Ryan Cohen, founder of billionaire online retailer Chewy Inc, is trying to turn GameStop into an e-commerce juggernaut that challenges big box retailers Target and Walmart, as well as technology firms like Microsoft Corp and Sony Corp.
Proponents of the change say the U.S. gaming market, estimated at $ 41.3 billion by the end of 2020 by data analytics firm Newzoo, has a large online company that better understands the needs of players and can sell products from $ 120 mice custom games, water – Cool PCs cost thousands.
However, Cohen is facing an uphill battle as more consumers go to download games digital or broadcast.
Since his arrival, the company has seen two senior executives leave, including chief financial officer Jim Bell. On Tuesday he appointed former Amazon CEO Jenna Owens as Chief Operating Officer in March.
GameStop said it would speed up service delivery, increase product delivery and hire people with experience in e-commerce. The company recorded a ninth straight decline in total sales, but investors were encouraged to triple the e-commerce sales by 2020.
Net sales dropped to $ 2.12 billion. Analysts on average expected $ 2.21 billion, according to IBES data from Refinitiv.
Adjusted income increased to $ 90.7 million, or $ 1.34 per share, from $ 83.8 million, or $ 1.27 per share, last year.
Reported by Tiyashi Datta and Uday Sampath Kumar.