In one of the largest equity offerings ever to be offered by a company in the retail sector, GameStop announced its intention to sell up to $1 billion worth of shares. Jeffries is reported to be managing the offering of approximately 3.5 million shares, with the proceeds of the sale being used to fuel the video game retailer’s corporate transformation. This move resulted in a slight decline in the company’s stock on Monday.
According to data from Bloomberg, GameStop’s latest offering is ten times larger than the one that it announced in December. What also makes the latest offering different is that, as opposed to traditional secondary offerings, this at-the-market program will enable direct sales to an influx of individual investors.
According to Telsey Advisory Group analyst Joe Feldman, the decision to convert some of the company’s shares into cash should be of great benefit to the organization’s transformational efforts. “Cash would be a more attractive currency than stock to complete an acquisition to accelerate the transformation”, Feldman commented in an email.
GameStop has suffered significantly from the video game industry’s shift from in-person to online sales. As a result, the company reported disappointing fourth-quarter earnings last month.
