(Bloomberg) — GameStop Corp. fell early on Monday after the company said it may sell up to $1 billion worth of additional shares in one of the largest at-the-market equity offerings ever announced for the retail sector.
The video game retailer declined as much as 6% to $179.90 at 9:54 a.m. in New York. Jefferies will manage the offering of up to 3.5 million shares, according to a statement, and proceeds will be used to further accelerate its corporate transformation.
GameStop’s offering plan is ten times larger than one it announced in December with Jefferies, according to data compiled by Bloomberg.
The at-the-market program is also different than traditional secondary offerings as it enables the company to sell shares directly into open-market buying that’s included an influx of individual investors.
“It makes sense to convert some of the stock into cash, which could then be used to accelerate the transformation effort,” said Telsey Advisory Group analyst Joe Feldman in an email. “Cash would be a more attractive currency than stock to complete an acquisition to accelerate the transformation.”
More than 2.7 million shares changed hands in the first 10 minutes of trading on Monday, more than double what’s been seen over the past five sessions.
As part of a corporate overhaul spearheaded by activist investor and board member Ryan Cohen, the company has brought in a number of new executives including a chief growth officer and chief technology officer, adding technology-focused senior executives to its team to move the company away from its brick-and-mortar business.
Read more: GameStop Adds Another Amazon Executive to Team
In a separate statement on Monday, GameStop released preliminary sales results for the first nine weeks of fiscal 2021, where total global sales increased about 11% from the same period a year ago. Total global sales jumped 18% in March after a 5.3% rise in February.
GameStop, based in the Dallas suburbs, has suffered with the video-game industry’s shift to online distribution. With gamers downloading more and more — or at least ordering software and gear via e-commerce — there’s less reason to make a trip to a physical store. The company reported disappointing fourth-quarter earnings last month.
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(Updates share price move in the second paragraph and adds more details throughout.)
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