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: GameStop falls after filing to sell up to 3.5 million shares

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GameStop Corp. shares dropped Monday, but bounced sharply off earlier lows, after the videogame and consumer electronics retailer finally took advantage of the trading frenzy in its stock to raise money through an “at-the-market” offering.

The company said it filed to sell up to 3.5 million shares of its common stock from time to time. That represents about 5.0% of the 69.9 million shares outstanding as of March 17.

Based on Thursday’s stock closing price of $191.45, the offering could raise up to $670.1 million. The company plans to use the proceeds from the offering “to further accelerate its transformation,” as well as for general corporate purposes and to strengthen its balance sheet.

The stock
GME,
-3.74%

was down 3.0% in midday trading, but was down as much as 16.2% at its intraday low of $164.81.

The share offering comes after the so-called meme stock rose 5.8% last week, and rocketed 1,002.2% over the past three months through Thursday. In comparison, the S&P 500 index
SPX,
+1.43%

had gained 7.9% the past three months.

Don’t miss: Reddit trading guru Keith Gill looks to have made over $25 million on his GameStop bet.

Separately, GameStop provided preliminary sales results for the fiscal first quarter.

Total sales for the nine weeks through April 4 rose 11% from the same period a year ago. That included a 5.3% rise in sales in February and an 18% sales increase in March.

The FactSet sales consensus for first-quarter of $1.14 billion implies an 11.3% rise from a year ago.

The company said government mandated restrictions resulting from the COVID-19 pandemic, primarily in Europe, negatively impacted results. The store base for the latest nine-week period decreased 13% from a year ago, due to its “store optimization efforts.”

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