GameStop announced earlier this month that it plans to sell up to 3.5 million shares. The company said on Tuesday it would use the proceeds from the offering to continue investing in its transformation into a more web-focused retailer and to strengthen its balance sheet.
The company’s shares have been ripped apart, although several hedge funds and other short sellers have bet against it.
That’s thanks to the new strategy put in place by Ryan Cohen, co-founder of the online pet supplies retailer. Soft (ALL), whose investment firm bought a significant stake in GameStop last year. And GameStop has also become the quintessential “meme stock”, as an army of individual investors on Reddit and other social media platforms enthusiastically defended the company against criticism from short sellers.
Cohen is expected to become GameStop chairman after its annual shareholders meeting in June.
GameStop CEO George Sherman also plans to step down later this year, a move that further illustrates Cohen’s growing control over the company. Over the past few months, GameStop has hired several former Chewy executives as well as some of Amazon (AMZN).
Despite enthusiasm for the future, GameStop still faces many current challenges as physical retailers slowly begin to reopen after the worst of the Covid-19 pandemic last year.
GameStop posted mixed results over the holidays. Profits for the fourth quarter missed Wall Street forecasts and overall revenue fell from a year earlier.
But ecommerce sales are up 175% from a year ago and now account for over a third of GameStop’s total revenue.