GameStop has sold over 5,000,000 of its own shares for a total of $1.1 billion, allowing it to fund its ambitious plans for an ecommerce model.
Video game retailer GameStop just turned an immense profit by selling off its own stock. GameStop's stock skyrocketed earlier this year, essentially saving the company from its almost certain demise. It had nothing to do with anything the company actually did, so much as it was artificially inflated by retail investors fueled by Reddit trying to create a short squeeze. This remarkable financial movement seems to have paid off for the beleaguered game store.
Throughout the last 6 months, the stock has maintained some of its sky high value. At the same time, GameStop has used this attention and momentum to restructure itself. GameStop has transitioned to an ecommerce business model, which has subsequently resulted in major executives, including the company's CEO, leaving the company. With such a major overhaul of pretty much the entire company, it looks like GameStop could possibly survive its recent financial hardships. This outcome is looking even more likely with the amount of cash that GameStop just came into.
GameStop has completed an at-the-market equity offering program, allowing the company to sell 5,000,000 shares of its own stock for well over a billion dollars (via Kotaku). This means that the company sold its shares at about $225.20 each, which is a far cry from the stock's roughly $4 value this time last year. Although some aren't happy about this decision from GameStop, it's only going to increase the longevity of the company and fund its hopeful future.
Nonetheless, GameStop is in the midst of a squeeze still. The stock rose a whopping 10% today, adding a whole $20 to its value after a rather crushing decline earlier this month. The stock was well over $300 a share, but ultimately collapsed to about $200 at its lowest point. Now, it appears to be going up once again. Only a handful of new changes have been implemented as part of GameStop's new business model, so it's not clear how this will all pan out in the long run.
It doesn't seem to matter right now, though, as the squeeze is still on and will likely continue to topple hedge funds. Former NBA superstar Michael Jordan lost millions in the GameStop squeeze back in January due to his close connections with a noteworthy hedge fund that was heavily shorting the company. As of right now, there's no telling just how successful this squeeze will be as it continues to test the lines of resistance. Either way, it seems like GameStop is benefiting more than any other party as it has repeatedly taken advantage of the chaos to keep itself away from certain death.
Source: Kotaku
