(Reuters) – GameStop Corp shares fell 12% on Monday after video game retailer said it could sell shares worth up to $ 1 billion as it takes advantage of a dizzying rise in its shares this year on the back of a Reddit-driven retail. commercial frenzy.
The company said it will sell up to 3.5 million shares and use the revenue to accelerate the shift from its business model to e-commerce in a review led by top shareholder and board member Ryan Cohen.
At Thursday’s closing price of $ 191.45, GameStop could reach GameStop for up to $ 670 million. However, the company is not required to sell shares at this value, as programs in the market allow companies to sell shares for an extended period of time.
GameStop shares have gained more than 900% so far this year, giving the company a valuation of up to $ 34 billion at a time when retailers were betting on hedge funds. Wall Street who had gotten short stocks.
Film operator AMC and airline American Airlines, which also benefited from the Reddit trade frenzy in January, were able to sell shares, but GameStop was unable to do so due to regulatory restrictions.
GameStop warned investors that buying shares of its offering could result in a “significant” loss if the price of its shares falls.
The new market offering brochure submitted to the U.S. Securities and Exchange Commission replaces a December one, in which GameStop had registered to sell shares worth $ 100 million. The company said it had not sold any shares according to the December brochure.
GameStop said Jefferies LLC would act as its sales agent for the new offer at a commission of up to 1.5% of the gross selling price per share.
Separately, GameStop said global sales for the nine-week period ending April 4 increased by about 11%.
Its shares fell $ 168.76 in pre-market trading.
Uday Sampath reports in Bengaluru; Edited by Arun Koyyur and Saumyadeb Chakrabarty