GameStop files to sell 20 million more shares

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By Maya Cantina

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

It’s becoming increasingly clear, at least in discerning financial circles, that Roaring Kitty — the progenitor of the retail-focused meme stock craze — is on a mission, one that involves recruiting its devoted army of retail investors to periodically pump up the price of GameStop’s stock, allowing the company to then leverage its artificially inflated stock price to raise more money.

Roaring Kitty GameStop Bomb

In early June, Keith Gill – who is popularly known by his Reddit pseudonym Roaring Kitty – revealed that he owned 5 million physical shares of GameStop and maintained control over an additional 12 million shares through his 120,000 stock options with a $20 strike price and expiry on June 21, triggering periods of bullish momentum in GameStop shares in the process.

After failing to spark a sustained bullish momentum in GameStop shares, however, Roaring Kitty announced on June 13th he had sold all of his call options and that he had converted the proceeds into additional shares. As of the last available update, Roaring Kitty owned 9.001 million shares of GameStop, up from his original 5 million shares.

While Roaring Kitty’s antics didn’t do much for everyday retail traders, her actions in May and June allowed GameStop to raise additional cash through an on-market offering of 20 million shares.

Well, three months later, as Roaring Kitty continued to offer hope to retail traders by posting cryptic memes and using her brief love affair with Chewy Inc. as a distraction, GameStop is today with another offering on the market of up to 20 million shares.

As of this writing, GameStop shares are down ~10 percent in after-hours trading. What’s the definition of crazy again?

GameStop Q2 2024 Earnings

Meanwhile, GameStop announced its second-quarter 2024 earnings today, reporting net sales of $798 million versus consensus expectations of US$ 895.67 million.

On the positive side, the company managed to report a positive net income of $14.8 million for the quarter, versus a net loss of $2.8 million that GameStop had posted in the same quarter last year.

GameStop files to sell 20 million more shares

Furthermore, thanks to Roaring Kitty’s antics, GameStop’s cash and cash equivalents stood at $4.204 billion at the end of June. Presumably, the latest off-the-shelf offering will play a major role in further boosting the company’s cash-based liquidity.

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