(Bloomberg) — GameStop Corp. climbed in premarket trading Tuesday after announcing that it completed an at-the-market offering program by selling 5 million shares for a total of $1.13 billion via Jefferies.
Shares of the video-game retailer surged as much as 11% to $223.21 in premarket trading after the announcement. It will use net proceeds from the offering for investing in growth initiatives and maintaining a strong balance sheet, the company said in a statement released Tuesday.
GameStop’s shares were sold for an average of $225.20, based on a Bloomberg calculation, above the stock’s 50-day moving average of $193.09. The total amount of shares sold represents the full capacity of its ATM authorization. It had announced on June 9 that it planned to sell as much as 5 million shares via an ATM offering.
An at-the-market offering deploys the historically unusual strategy of selling shares directly into the open market. Traditional stock offerings are sold almost entirely to institutional investors, but the rise of retail trading is leading corporate issuers with large followings among day traders like GameStop to cater their financings to go directly to individuals.
It’s the second time this year that GameStop tapped equity markets after raising $551 million in April. Meme stocks have been using at-the-market offerings to raise capital because they target the retail investors who’ve been driving up shares in the open market.
This is the latest at-the-market offering followed similar programs by day-trader favorites like AMC Entertainment Holdings Inc., Express Inc., Castor Maritime Inc., Torchlight Energy Resources Inc. and Novavax Inc. over the past few weeks alone.
GameStop is one of the Reddit-driven “meme” stocks that have soared this year. Despite a sharp retrenchment since June 9, it’s still up 964% in 2021 through Monday. Activist investor Ryan Cohen has built a 13% stake in GameStop and is leading an effort to transform the video-game retailer into an e-commerce powerhouse, away from its brick-and-mortar roots.
The unusual trading of GameStop and others has drawn the interest of the Securities and Exchange Commission. GameStop said earlier this month that it received a request from the agency’s staff for “voluntary production of documents and information concerning an SEC investigation into the trading activity in our securities and the securities of other companies.” GameStop doesn’t expect the inquiry to adversely affect the company.
Some other meme stocks were climbing in premarket trading with Clover Health Investments Corp. advancing about 3% and Torchlight Energy Resources Inc. rising 4.4%, while Koss Corp. gains about 2.2%.
(Updates with more details throughout.)
More stories like this are available on bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.