GameStop issuing more shares

Image: Lyonstock/Shutterstock.

GameStop is attempting to make the most of the increased interest in its stock that has seen the price surge over the past few months. Previously, the retailer wasn’t able to take advantage of the situation due to certain documents having not been filed. Now though, the company is ready.

Before trading today, the retailer revealed that a filing had been made with the US Securities and Exchange Commission. This filing was to offer and sell up to 3.5 million more shares at the common market price.

At the end of trading today, the share price for GameStop was $186.95. With 3.5 million shares on offer, the company stands to take $654 million more if all shares are purchased at at least this price.

At the beginning of 2021, the share price for the company was below $19. Many individual investors noticed that the company’s stock was being shorted by large hedge funds. They then came together under WallStreetBets on Reddit and caused a squeeze. This pushed the price of shares in GameStop up to $483 per share by the end of January.

The stock then fell to $40, and has since recovered over the past month or so. It’s still highly volatile, with more and more individual investors coming on board to try to get in on the action. After the initial squeeze though, things have calmed down a lot.

GameStop hasn’t confirmed when the new shares will be released. The company is currently considering a number of factors and will update those interested as soon as possible.

It’s likely that the release of these new shares will initially drive down the price of GameStop shares at first. However, there will then be so much buying and selling for those who want to own a piece of the company that the share price will soar back up soon enough.

Ultimately, this will almost certainly cause another squeeze. However, GameStop will benefit from it this time around. This will help the company fund the de-densification effort that it’s been going through over the last couple of years. It may even help the company realise its new future image.