GameStop shares fell 12 per cent on Monday after the video game retailer said it may sell up to $1 billion worth of stock as it takes advantage of a dizzying rally in its stock on the back of a Reddit-driven retail trading frenzy.
The company said it would sell up to 3.5 million shares and use the proceeds to speed up the shift in its business model to e-commerce in an overhaul being led by top shareholder and board member Ryan Cohen.
At Thursday's closing price of $191.45, the “at-the-market” sale could fetch GameStop up to $670 million. The firm, however, is not obligated to sell shares at that value since at-the-market programs allow firms to sell stock over a prolonged period of time.
The stock has gained more than 900 per cent so far this year, giving the company a valuation of as much as $34 billion at one point as retail traders bet against Wall Street hedge funds that had shorted its shares.
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