Business
GameStop Billionaire Ryan Cohen Buys Another $10 Million In Stock As Shares Skyrocket
March 23, 2022
June 22, 2021
Brick-and-mortar retailer GameStop said Tuesday it raised more than $1.1 billion in a stock offering, marking the long-struggling company's latest attempt to capitalize on a massive Reddit-fueled stock surge and restructure its business to focus on ecommerce.
As part of a previously announced equity offering, Grapevine, Texas-based GameStop disclosed Tuesday it ultimately sold 5 million shares for an average price of $225.20—a staggering 1,206% higher than the stock's closing price of $17.25 on the year's first trading day.
Though it didn't make any further disclosures Tuesday, GameStop said in a regulatory filing earlier this month it plans to use proceeds to invest in "growth initiatives" and help bolster its cash on hand.
In April, the company raised another $551 million by selling 3.5 million shares at an average price of about $157.
Though the broader market was virtually flat Tuesday morning, GameStop shares jumped more than 7% in pre-market trading (to $215), still less than the average sale price in the recent offering but up 1,150% this year alone.
GameStop’s unlikely surge has continued with a vengeance—and volatility—since Reddit traders declared it their meme stock of choice in January, plowing into the stock in an effort to drive up prices and force institutional investors to close out their bearish bets on shares. The runup in prices has helped recently appointed board chair Ryan Cohen, the billionaire cofounder of online pets supplies store Chewy, mint a digitally focused turnaround. Thus far, he's helped tap a slew of tech veterans to replace many of GameStop's top executives. Earlier this month, the company tapped Amazon veteran Matt Furlong as its new CEO and a fellow Amazon executive as chief financial officer.
London-based hedge fund White Square Capital closed its doors after facing massive losses from its short bets against GameStop and other so-called meme stocks, the Financial Times reported Tuesday, becoming one of the first casualties of the year's retail trading frenzy, which has largely favored struggling companies heavily shorted by institutional investors.
Despite the surging share prices, GameStop closed 118 stores and reported greater-than-expected losses per share in the first quarter, sending shares tumbling nearly 34% this month alone. Analysts give the stock an average price target of just $65—less than a third of current prices.
Source: Forbes
Image Source: Getty Images
