GameStop's Stock Price Drops

GameStop Corporation has announced its intention to sell up to 45 million shares of its class A common stock. This decision has resulted in a significant drop in the company's stock price. The sale will be facilitated through an open market sale agreement with Jefferies. The net proceeds from the sale are planned to be used for general corporate purposes, which may include potential acquisitions and investments. However, no specific plans, commitments, or arrangements have been made at this time.

The company's stock price has seen a decrease following the announcement of the share sale, with shares opening about 20% down. The company, which is valued at approximately $6.5 billion, anticipates this move will dilute the stake of current shareholders.

GameStop has also reported a decline in revenue for its latest quarter. The company projects sales to be between $872 million and $892 million, a decrease from $1.24 billion a year earlier. This decrease in sales is due to a shift of customers to online purchases, a trend that has been amplified by the ongoing pandemic.

In addition to the share sale, GameStop has filed a shelf registration with the Securities and Exchange Commission. This registration would permit the company to sell more shares of common stock and preferred stock, along with warrants, stock purchase contracts, units, and subscription rights. The company anticipates a loss of $27 million to $37 million for the 13 weeks ended May 4. This is compared with a $50.5 million loss in the same quarter a year ago. Overhead costs are expected to be in the range of $290 million to $300 million, down from $345.7 million a year ago.