GameStop Corp yesterday is likely to sell new shares after the firm tried to take advantage of its sharp rise in share price since January.
GameStop shares were down about 14%, after declining more than 6% during the regular trading session.
The firm made a statement on its share offering in a fourth-quarter earnings report showing GameStop e-commerce sales growth of 175%.
GameStop reported a decline in its quarterly net sales, which did not meet analysts ’expectations and a decline in gross margins.
Many market experts urged GameStop to take advantage of its sharp rise in share price to sell new shares.
However, according to a Reuters report last month, the firm decided the sale of the new shares was prohibited under U.S. financial regulations because GameStop had not yet communicated its earnings report to investors.
The situation occurred despite GameStop having registered with the US Securities and Exchange Commission (SEC) in December to sell US $ 100 million worth of shares through an ‘at-the-market’ (ATM) offering.
“Since last January, we have been evaluating whether to increase the size of the ATM program or sell Class A Ordinary Shares under the enhanced ATM Program throughout fiscal year 2021, specifically to fund our future transformation initiatives and general working capital requirements,” GameStop said in the alert.
The company recorded a quarterly decline for the ninth consecutive time in its overall sales but investors were confident of a nearly three-fold increase in e-commerce sales last year.
Net sales fell to US $ 2.12 billion. Analysts forecast average GameStop sales of US $ 2.21 million.
Meanwhile, GameStop's adjusted net income increased to US $ 90.7 million or US $ 1.34 per share from US $ 83.8 million or US $ 1.27 per share in the previous year.
