News
GameStop Stock Soars as Meme Icon Raises Nearly $1 Billion in Stock Sale
GameStop Stock (GME) rose as much as 22% on Tuesday after the video game retailer said it raised nearly $1 billion in its latest stock offering.
GameStop shares opened around $23, well below the nearly $65 level reached earlier this month during a short-lived meme manifestation.
Still, Tuesday’s stock action reflects investors’ exuberance when it comes to meme stocks, or those that raise bids through online buzz to the point that they move away from fundamentals, according to one strategist.
“If this were a normal market, people would be a little scared,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance.
He added: “You don’t sell shares in the market if you think they are undervalued. You do this when you think your stocks are overvalued.”
GameStop is a heavily shorted stock, with short interest just over 21% of the float.
The company took advantage of the unexpected rally in memes in mid-May, selling 45 million shares and raising about $933 million, according to a Friday statement.
GameStop said it intends to use the net proceeds for general corporate purposes, which could include acquisitions and investments.
The offering was first announced on May 17 together with the company preliminary financial resultscausing the stock to plummet up to 30% that day.
O offer was seen as a smart move by some Wall Street analysts amid the video game retailer’s financial difficulties. GameStop’s quarterly sales fell sharply from the same period a year ago, according to its most recent earnings report.
GameStop’s move to sell shares coincided with a similar move by fellow meme stock play AMC Entertainment (AMC). The theater chain also capitalized on the meme frenzy by raising $250 million by selling 72.5 million shares, earlier this month.
AMC shares rose more than 2% on Tuesday.
GameStop soared in a two-day period that began May 13 after the online resurgence from “Roaring Kitty,” the person seen as kickstarting the meme stock frenzy of 2021.
Roaring Kitty testifies during a virtual hearing on GameStop in 2021. (House Financial Services Committee via AP, File) (ASSOCIATED PRESS)
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X at @ines_ferre.
Click here for the latest stock market news and in-depth analysis, including events moving stocks
Read the latest financial and business news from Yahoo Finance