(Reuters) – GameStop Corp said on Tuesday it could sell new shares this year to profit from a more than 800% rise since January in the share price of the US video game retailer at the center of the Reddit rally of Same stocks. ”
GameStop shares turned after a few hours and lost 12%. The company commented on the stock offering in a regulatory filing for fourth quarter earnings which showed GameStop returned to profitability, with 175% growth in online sales.
Shares of Grapevine, Texas-based GameStop have soared this year as retail traders bet against Wall Street hedge funds that shorted the stock. The company’s valuation reached $ 33.68 billion, more than Best Buy Co Inc.
Many market experts have urged GameStop to take advantage of the huge rise in its share price to sell new shares.
However, the company decided it could not sell shares under US financial regulations because it had not yet informed investors of its profits, Reuters reported last month.
This is despite GameStop having already registered with the United States Securities and Exchange Commission (SEC) in December to sell $ 100 million of shares through a market offer (ATM).
That would no longer be an obstacle after the company announced its fourth quarter results.
“As of January 2021, we are evaluating whether to increase the size of the ATM program and whether to potentially sell shares of our Class A common stock as part of the increased ATM program in fiscal year 2021, primarily to finance the acceleration of our future. transformation initiatives and general working capital needs, ”GameStop said in a regulatory filing.
Major shareholder Ryan Cohen, the billionaire co-founder of online pet supplies retailer Chewy, is trying to build the company into an e-commerce business capable of going after big box retailers like Target and Walmart, as well as only to technology companies such as Microsoft Corp and Sony Corp.
It faces an uphill battle as more consumers turn to downloading games digitally or streaming through services like Google Stadia.
Since his arrival, the company has seen two senior executives leave, including CFO Jim Bell.
GameStop has also brought new faces. He announced on Tuesday that he had appointed Jenna Owens, former head of Amazon, to the post of director of operations in March.
GameStop said it will spend 2021 improving the speed of its delivery services, expanding its product offering, and hiring people with experience in e-commerce.
Investors looked past a ninth straight quarter of declining overall sales, which in part contributed to a nearly three-fold jump reported in global e-commerce sales in 2020.
Net sales fell to $ 2.12 billion in the fourth quarter, the ninth consecutive quarter of declines. Analysts were expecting an average of $ 2.21 billion, according to IBES data from Refinitiv.
Adjusted net income was $ 90.7 million, or $ 1.34 per share, from $ 83.8 million, or $ 1.27 per share, a year earlier.