GameStop Raises over $1B in Equity Offering; Stock Jumps 10%

GameStop (GME) has completed its “at-the-market” equity offering program, raising more than $1 billion. GameStop stock rose 10% on Tuesday to close at $220.40.

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On June 9, the company revealed that it had filed a plan with the SEC to sell up to 5 million shares of its common stock. It said it would sell the shares at-the-market from time to time.

The program was successful as the company managed to sell all the shares to raise $1.13 billion. GameStop intends to use the money to invest in growth and maintain a strong balance sheet.

Headquartered in Texas, GameStop is a specialty retailer of games and entertainment products. It operates a network of thousands of retail stores and also sells its items online. (See GameStop stock chart on TipRanks).

Wedbush analyst Michael Pachter recently reiterated a Sell with a price target of $50 on GameStop stock. Pachter’s price target suggests 77.31% downside potential.

The analyst noted that GameStop’s share price has risen to levels not aligned with the fundamentals of the business. Pachter cited retail investor enthusiasm and a high-profile short squeeze in recent months as the reasons for that. However, the analyst still sees some good business opportunities for GameStop.

“GameStop is well-positioned to be a primary beneficiary of the new console launches, and we remain quite optimistic that it will return to profitability by FY:21,” noted Pachter.

The analyst expects GameStop to generate net sales of $5.71 billion and deliver adjusted EPS of $1.24 in Fiscal 2021.

Consensus among analysts is a Moderate Sell based on 1 Buy, 2 Holds, and 3 Sells. The average GameStop analyst price target of $73.75 implies 66.54% downside potential to current levels.

GME scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.