GameStop Corp GME has successfully concluded an “at-the-market” equity offering, raising approximately $2.14 billion. However, the funding source for this significant transaction has raised eyebrows, with a prominent wealth CEO publicly expressing concerns.
What Happened: The video game retailer announced the completion of its share sale on Tuesday. This development comes shortly after the return of meme stock influencer Keith Gill, also known as “Roaring Kitty,” who played a key role in the recent surge of GameStop stock.
Ross Gerber, CEO of Gerber Kawasaki Wealth, took to social media to voice his concerns about the share sale. He questioned the source of the $250 million that Gill used to invest in GameStop, suggesting that this funding may have saved GameStop’s CEO, Ryan Cohen.
“Gamestop raises $2.1 bil more dumping 75 mil of shares. Kitty pump, $GME dump. Now Gamestop is basically a $4 bil SPAC losing $200 mil a year… Cohen is saved by Kitty. Have we figured out where Kitty got the $250 mil????” Gerber wrote on X.
Why It Matters: GameStop’s recent share offering has been a topic of interest within the financial community. The company’s shares have been on an upward trajectory, largely due to the return of Roaring Kitty and several share offerings that have bolstered the company’s cash reserves.
Despite the controversy surrounding the share sale, some analysts believe that GameStop’s strong cash position could be a turning point for the company. This sentiment was echoed by CNBC’s Jim Cramer, who declared GameStop the victor after the completion of its equity offering.
Given the massive cash position, Cramer argued that GameStop is no longer a public video game retailer, instead it's acting as a Cohen SPAC (special purpose acquisition company), he said.
However, the recent surge in GameStop’s stock has not been without its challenges. Despite the stock’s resurgence, Keith Gill’s potential billionaire status was complicated by a price drop in GameStop shares.
Price Action: GameStop Corp.’s stock closed at $25.46 on Wednesday, marking a significant decrease of 16.50% for the day. In after-hours trading, the stock rose to $26.00, reflecting a gain of 2.12%. Year to date, GameStop’s stock has seen a notable increase of 52.73%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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