Video game and console retailer GameStop said on Monday (April 5) that it is looking to issue 3.5 million new shares of stock at current market prices in a move that would reap over $600 million at current prices to “further accelerate its transformation.”
In announcing its filing to sell additional shares in a so-called “at the market” (ATM) offering, the Texas-based owner of some 4,200 global stores is looking to take advantage of the massive increase in its stock price over the past six months, which has lifted its share price from $5 to nearly $200 and left it with a market value of more than $13 billion.
The surprise announcement comes just one week after the company appointed former Amazon executive Jenna Owens as its chief operating officer and Elliott Wilke as its new chief growth officer to help the embattled retailer further its digital transformation, including the expansion of its customer loyalty plans and omnichannel marketing efforts.
The proposed stock sale also comes two weeks after GameStop’s fourth-quarter earnings reflected a 175 percent increase in its global eCommerce sales, which now account for one-third of its total revenue — or triple the rate of online business it did a year ago.
In addition, former Chewy CEO Ryan Cohen has become GameStop’s largest shareholder, and has taken an active role by personally marshaling the company’s overhaul.
Taken together, the string of events are all part of a broader strategy to reduce the company’s reliance on brick-and-mortar stores amid an unprecedented amount of speculation concerning the company’s stock from both skeptics and believers.
“We are focused on transforming into a customer-obsessed technology company that delights gamers,” CEO George Sherman said on the company’s earnings call last month. “Our emphasis in 2021 will be on improving our eCommerce and customer experience, increasing our speed of delivery, providing superior customer service and expanding our catalog.”
In addition to having the ability to sell shares to raise cash as it sees fit, the company also preannounced partial first-quarter sales results. Two-thirds of the way through the quarter, GameStop said its first nine weeks of sales rose 11 percent through April 3. The company also noted that over the past five weeks, its sales growth rate had accelerated to 18 percent.
The company also reminded investors that year-over-year sales comparisons will start to become highly impacted by the shuttering of almost all locations due to the initial pandemic closures in 2020.
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