Plans to sell more shares may have overshadowed some positive news for
Shares of the video game retailer approached their January stratospheric highs earlier this week, but fell sharply on Thursday.
GameStop stock (ticker: GME) closed 27% lower, at $ 220.39. It was his lowest close since May 25, ending a three-day winning streak. The stock saw significant volume, with 22.5 million shares traded, the highest number since March 26.
AMC Entertainment Holdings
(AMC) fell 13%, to $ 42.84.
This time around, investors weighed in better-than-expected financial results and the appointment of new leadership over news, released Wednesday night, that the company filed to sell 5 million shares at market prices. GameStop also said it is cooperating with a Securities and Exchange Commission investigation into the trading of its stocks and other securities.
Stock offerings tend to drive down the price of existing stocks, but Wedbush analyst Michael Pachter cited positive things in the news. He noted that in the grand scheme of things, such a sale would only mean a dilution of about 7%. The company finalized an offering of 3.5 million shares earlier this year.
Pachter maintained an underperformance rating on the stock, but raised its price target to $ 50 from $ 39, reflecting the cash the company will get from the sale. He said a conservative estimate is that the shares will sell for an average price of $ 200.
Quarterly results have been mixed, according to Pachter. Sales were better than expected, but the company’s adjusted net loss was larger than expected.
In addition to the stock sale and SEC news, the company said it was hiring two former
(AMZN) will be its next CEO and CFO. Ryan Cohen, the co-founder of Chewy and a major holder of GameStop shares, addressed shareholders after being elected chairman of the board.
Jefferies analyst Stephanie Wissink maintained a maintenance rating and a street-high price target of $ 175 in a note Thursday. She notes that new CEO Matt Furlong and CFO Mike Recupero are joining several recent hires with experience from Amazon.
“We were following the leadership changes at GME closely as the new appointments gave us clues as to the degree of transformation underway,” Wissink wrote.
Baird analyst Colin Sebastian said that while Cohen’s address to shareholders described some of his philosophies, the information about GameStop’s actual strategy still lacks substance. While the stock rally and new game consoles from Sony and Microsoft have benefited the company, Sebastian said the board had not provided details on how he plans to adapt to the changes. digital trends that threaten to eliminate the need for its video game stores.
These trends include broader changes to direct downloads, streaming, and cloud services. Sebastian maintained a neutral rating and a price target of $ 25, highlighting the non-fundamental factors driving the stock’s performance and volatility.
“There is no doubt that the console’s transition period provides a lifeline, but games are not dog food, and investors deserve more than memes to gauge the long-term fundamental outlook for the game. a business, ”Sebastian wrote.
Write to Connor Smith at [email protected]