(Reuters) – GameStop Corp shares fell 12% on Monday after the video game retailer said it could sell up to $ 1 billion worth of shares as it uses a dizzying rally in its shares this year due to a Reddit driven retail. trade madness.
The company said it would sell up to 3.5 million shares and use the proceeds to accelerate the shift from its business model to e-commerce, while leading major shareholder and board member Ryan Cohen.
At Thursday’s closing price of $ 191.45, GameStop could sell up to $ 670 million in the market. However, the company is not obligated to sell shares at that value, as programs on the market make it possible to sell shares over a long period of time.
GameStop’s share has risen more than 900% so far this year, bringing the company to a valuation of as much as $ 34 billion at some point while retailers are betting against Wall Street hedge funds shorting its shares.
AMC and airline operator American Airlines, which also benefited from the Reddit-driven trade chase in January, were able to sell shares, but GameStop was unable to do so due to regulatory restrictions.
GameStop has warned investors that buying shares in its offering could result in a ‘significant’ loss if its share price falls.
The new prospectus offered on the market, filed with the U.S. Securities and Exchange Commission, replaces a December prospectus in which GameStop is registered to sell shares worth $ 100 million. The company said it had not sold any shares under the December prospectus.
GameStop said Jefferies LLC is acting as its sales agent for the new offer at a commission of up to 1.5% of gross sales price per share.
Separately, GameStop said global sales for the nine-week period ending April 4 increased by about 11%.
Its shares fell to $ 168.76 in market trading.
Reporting by Uday Sampath in Bengaluru; Edited by Arun Koyyur and Saumyadeb Chakrabarty