The embattled video game retailer GameStop has raised $551 million via the sale of 3.5 million new shares of stock, the company announced Monday afternoon (April 26), saying the proceeds would be used to continue accelerating its transformation, as well as for general corporate purposes.
The so-called “at-the-market” share sale comes after GameStop’s stock has soared nearly 1,000 percent in the past six months after being caught in the middle of a passionate high-stakes debate between investors who both love and hate the company.
For its part, the Grapevine, Texas-based operator of nearly 5,000 global retail locations is in the midst of a sweeping business overhaul being marshalled by 35-year-old billionaire activist investor Ryan Cohen, the former Chewy.com co-founder who is now GameStop’s largest shareholder and chairman.
Under Cohen’s short tenure at GameStop that began in January, the company has replaced its entire suite of chiefs, (CEO, COO, CFO, CTO, CMO) shored up the board with allies, and brought in talent and eCommerce expertise from the likes of Amazon and Google.
In announcing the company’s fourth-quarter results in late March, outgoing CEO George Sherman told investors that the company’s eCommerce revenues rose 175 percent, accounting for nearly one-third of the company’s total sales and reducing its reliance on brick-and-mortar stores.
While the year-on-year comparisons are going to get tougher going forward, Sherman said the quarter marked the starting point in GameStop’s transformation into “customer-obsessed technology company that delights gamers.”
Two weeks later, the company gave a partial, mid-quarter sales update that showed global sales increased approximately 11 percent in the first nine weeks of the quarter, but did not break out the digital details.
But now, with Cohen’s management makeover complete and the firm’s Q1 results and annual meeting scheduled for June 9, the specialty retailer is running out of time to deliver the tangible results that its backers need in order to justify the company’s new $13 billion valuation and keep the legion of GameStop skeptics at bay.
Since Feb. 1, the company has posted 13 different press releases related to personnel changes and capital raising, one partial sales update that was light on details, but nothing specific yet about how its digital transformation is actually going. Maybe it’s just a coincidence, but during that same period of time, shares of GameStop have fallen 25 percent.