GameStop share-buying spree ends in flop after week of stocks frenzy

The company, which largely relies on sales at its bricks-and-mortar stores, has been hurt by customers' transition to buying online

GameStop has filed for a mixed-shelf offering, where it can raise capital by selling different  securities in separate offerings.

Retail darling GameStop slumped 24% on Friday, after the struggling videogame retailer said it would sell up to 45m shares, taking advantage of the meme stocks frenzy that took hold this week.

The Texas-based firm logged its highest trading volume in three years this week, following a series of posts from Keith Gill's X account "Roaring Kitty", whose bullish calls on GameStop were a reason for the 2021 meme-stock frenzy.

"Companies have also learned to take advantage of the market disruption with quicker secondary offerings," said Rick Meckler, partner at Cherry Lane Investments.

"This can blunt price rises by meeting demand with additional new shares being supplied,” Mr Meckler said.

Mixed-shelf offering

GameStop has filed for a mixed-shelf offering, under which a company can raise capital by selling different types of securities in one or more separate offerings.

GameStop said its first-quarter net sales were expected to drop to the range of $872m (€801m) to $892m, from $1.2bn a year ago.

The company, which largely relies on sales at its bricks-and-mortar stores, has been hurt by customers' transition to buying video games and collectibles online.

However, net loss in the quarter ended May 4 is expected to be between $27m and $37m, narrower than the $50.5m a year ago, as GameStop benefits from cost cuts.

• Reuters