GameStop pips double-digit losses in volatile trading

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GameStop pips double-digit losses in volatile trading

Shares of GameStop pared their double-digit losses in historic trading, which occurred Monday morning after the video game retailer said it may sell up to$ 1 billion worth of short shares following a volatile Reddit-fueled short squeeze. GameStop traded lower at around$ 182 a share for the last time on October 10, the company saw its shares drop as much as 14% after it announced a stock offering of up to 3.5 million shares. The company said it planned to use the proceeds to further strengthen its e-commerce transformation as well as general corporate purposes and further strengthen its balance sheet. The offer is seen as a way for retailer to capitalize on its recent jaw dropping rally, prompted by a band of Reddit retail traders who targeted heavily shorted stocks.

In January, GameStop jumped 400% in a week to above$ 400 a share amid the massive short squeeze. At the beginning of the year, GameStop, a brick and mortar retailer, traded at less than$ 20 a share. GameStop is in the middle of a technology and e-commerce transition led by activist investor Chewy and board member Ryan Cohen, who was Chewy ’ s co-founder.

The company hires the new Amazon executive Jenna Owens as its former Chief Operating Officer. In a separate release on Monday, GameStop said its global sales for the first nine weeks of fiscal 2021 increased from the same period a year ago to about 11%. For the five-week period ended April 2, global sales grew 18% year over year, the company said. The company has yet to show financial success in an industry that is rapidly shifting to digital, said Joseph Feldman, an analyst at Telsey Advisory Group in a note on Monday. We continue to believe that the current valuation is much higher than our rosy fundamental expectations and projected multi-year benefits from the strategic transformation. Two weeks ago, the company reported worse-than expected fourth quarter results that missed on the bottom and top lines. However, GameStop said that its e-commerce sales jumped 175% in the last quarter and more than a third of its sales in the period.

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