GameStop is planning to sell a large portion of its shares in an effort to take advantage of its historically high stock price. GameStop announced these plans this morning, causing the shares to decline for a couple of hours before they shot back up. The volatile stock has been one that many have been eyeing for months following a large short squeeze that became so valuable even GameStop itself is interested in cashing out.
The GameStop chaos destroyed Michael Jordan's net worth after some unfortunate deals with hedge funds, but has returned thousands of dollars to average Joes who jumped on the train early enough. GameStop's share price was in the single digits just a year ago, right when the pandemic began, but momentum brought it up to roughly $20 by the end of 2020 thanks to holiday sales and new console releases. In January, the shares shot up from mid-double digits to well over $350 within a week. It all came crashing back down eventually and many assumed that the fun had ended, but it seems there's still hope for GameStop.
Following another major rally on the market in March, GameStop shares soared once again. New plans were put in place to have Chewy.com founder Ryan Cohen transform the company from a struggling retailer to an ecommerce giant. GameStop now plans to sell 3.5 million shares of its own stock to help fund this drastic transformation (via GamesIndustry.biz). The company noted that the money will be used "to further accelerate its transformation as well as for general corporate purposes and further strengthening its balance sheet."
When this happens is unclear, as it seems the retailer is developing an exit strategy to get the most bang for its buck. The stock closed at $186.95 today, which would give the retailer over $654 million in cash if it sold at that price. Given the fact that GameStop's stock has recovered multiple times and shot up to baffling numbers, it wouldn't be surprising if the company is just waiting for another big surge to cash its check.
Even though GameStop reported weak financials in its recent earnings call despite the launches of Xbox Series X and PlayStation 5, as well as holiday sales, many believe that the proposed new era of GameStop could be big. Whether or not it's big enough to be worth its current value is the biggest question, but it's not impossible for it to at least hold a higher value than it has in recent years.
