- GameStop shares rallied 8% Tuesday after the company raised $1.1 billion in a stock offering.
- The rally adds to the video-game retailer’s approximate 1,000% rise so far this year.
- The company plans to use proceeds for general corporate purposes and growth initiatives.
- See more stories on Insider’s business page.
GameStop shares rallied 8% early Tuesday after the video-game retailer announced it raised $1.1 billion from an equity offering.
In a statement, the company said it completed its previously announced at-the-market equity offering, selling 5 million shares of its common stock to raise $1.126 billion – bringing GameStop’s total capital on hand to about $1.9 billion.
The proceeds will be used for “general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet,” the company said in its statement.
Tuesday’s jump added to the stock’s approximate 1,000% rise so far this year, according to Markets Insider data. The meme stock began its meteoric rise in January amid hype from retail traders on social media sites like Reddit’s Wall Street Bets, who sparred with hedge funds to trigger a short squeeze.
Since GameStop entered the spotlight, it’s gotten an activist investor and new chairman in Chewy cofounder Ryan Cohen, who has said he plans to turn GameStop into the Amazon of gaming. The company has since hired several Amazon veterans, including Matt Furlong, a former senior executive at Amazon, who is taking over GameStop as CEO.
Other companies, such as AMC Entertainment and BlackBerry, also joined the meme stock ranks earlier this year. Amid renewed interest in meme stocks last month, a slew of new names, like ContextLogic, Clean Energy Fuels, and now tiny Texas oil driller Torchlight, have also become retail-trader favorites.
GameStop isn’t the only one to leverage retail-trader interest by raising capital through an equity offering.
AMC Entertainment has had several equity offerings in the past year and is hoping to have another one. Plus, several struggling companies, including apparel-retailer Express, deepwater drilling contractor Transocean, and coal producer Peabody also have sought help from equity investors amid the hype in retail trading.