The leading name in the industry of video game retailing, GameStop has managed to raise as much as $551 million for funding its e-commerce transformation. The raise has been achieved through the sale of as many as 3.5 million new shares of the given stock. As per the announcement of the company, it revealed that the proceeds would be utilized for continuing the acceleration of its ecommerce transformation. At the same time, the funding will also be utilized for general corporate purposes.
The typical “at-the-market” share sale is known to come after the stock of GameStop has increased as much as 1000 percent in the duration of the last 6 months. It occurred after the stocks of the company were locked up in the middle of the debate involving high stakes amongst investors –those who love and those who hate the company.
For its part, the company that is based in Grapevine, Texas, features as many as 5000 retail locations across the globe. The company is currently in the midst of the transforming business overhaul being accelerated by Ryan Cohen –the 35-year-old billionaire and activist. He also serves as the former co-founder of Chewy.com. Currently, he is the chairman and largest shareholder of GameStop.
Under the short tenure of Cohen at GameStop that started in January, the company went forward with replacing its complete panel of executives –including CTO, CEO, CFO, COO, and CMO. The company also went ahead with bringing in talent along with ample e-commerce expertise –similar to Google and Amazon.
Favoring the Gamers Around the World
During the announcement of the 4th quarter results of the company during late March this year, George Sherman –the CEO of the company, revealed to the investors that the e-commerce revenues of the company increased by as much as 175 percent. This accounts for around 1/3rd of the total sales of the company. At the same time, it also helped in reducing the reliance of the consumers on brick-and-mortar stores.
While the annual comparisons are getting tougher day by day, Sherman revealed that the given quarter marked the initial point in the transformation of the company. The company aims at transforming itself into a customer-centric technology company for favoring gamers.
After the span of 2 weeks, the company offered a mid-quarter, partial sales update that revealed global sales had increased by as much as 11 percent during the 1st nine weeks of the quarter. However, it was not capable of breaking out the digital details.
However, now with the management makeover of Cohen, the Q1 results of the firm, along with its annual meeting that was scheduled for 9th June, it is revealed that the retailer is running short of time for delivering tangible results. Its backers require the results for justifying the new valuation of $13 billion of the company and keeping the legion of GameStop at bay.
Since the time of 1st February, the company has laid out as many as 13 different types of press releases with respect to capital raising and personnel changes. It could be a coincidence. However, it was revealed that during the given time period, shares of the company have gone down as much as 25 percent.
The Jumping Shares of the Company
The shares of GameStop Corporation continue revealing strength while jumping by around 12 percent on 26th April 2021 during the given trading session. The company revealed that it has been successful in completing around 3.5 million sales in the form of shares of the common stocks. The company attributes the increase in sales to the specialized equity offering program or the ATM offering. The company was successful in generating combined gross proceeds before commissions while providing expenses of around $551 million.
The management aims at making use of the net proceeds towards the acceleration of the transformation of GameStop. The industry experts reveal that the action of selling away shares of the company has helped it ensure cash on the significant price surge that happened in January because of the potential of short-squeezed events.
On 5th April, the company went forward with filing the prospectus supplement with the United States Securities & Exchange Commission. In the given prospectus, the company aims at offering and selling up to 3,500,000 shares of the common stock in a timely fashion through its ATM offering. It has been observed that the company has also issued the irrevocable notice for redeeming around $216.4 million towards the principal amount of the 10 percent of the Senior Notes that is due in 2023. This aims at covering the full amount of the respective outstanding notes. Therefore, it represents the entire range of long-term debts.
For accelerating the overall transformation, the company aims at undertaking the process of board restructuring. The company has come up with a proper Strategic Planning & Capital Allocation Committee. Since the advent of the committee, GameStop has come up with a board of executives having ample experience in the field of e-commerce, technology, and customer care.
At the same time, the inflow of cash with the help of the latest equity services will help in further strengthening the company to execute transformational activities. The given set of moves is expected to allow the company to evolve into a digitally advanced and strong player in the modern gaming industry.
More Steps Towards Accelerating the Transformation
GameStop continues gaining from its rapid rise in the overall e-commerce market. Quite notably, the e-commerce sales of the company have surged by around 175 percent during the 4th quarter of 2020. The results have been gained due to the increased demand for consoles as the organization transformed from 8th generation to 9th generation console gaming gadgets or products.
The management of the company emphasized that the online aspect of the company is gaining out of the investments for boosting omni-channel capabilities. In the given aspect, the company aims at gaining from improved fulfillment capabilities along with a number of flexible options of payments.