Shares of GameStop — the struggling retailer at the heart of the trading frenzy that captured the country’s imagination in January — tumbled in after-hours trading on Tuesday as quarterly earnings missed expectations and the company said in a filing it could sell additional shares.
The company’s stock was down roughly 12 percent shortly after 6 p.m. The shares had remained steady amid a brief conference call in which executives presented the company’s results and declined to take questions.
But the stock began to slide after the company said in a separate filing with the Securities and Exchange Commission that it was evaluating whether to sell additional stock “primarily to fund the acceleration of our future transformation initiatives.”
Such a share sale would reduce the value of the company’s outstanding stock, essentially by increasing the supply, in a process called dilution.
The drop in share prices was the latest bout of volatility for a stock that earlier this year became a battleground between a throng of individual traders loosely organized on Reddit and sophisticated hedge funds that had bet aggressively that the shares of the largely brick-and-mortar retailer were doomed to fall.
For a brief moment in late January, the Reddit traders got the upper hand, setting off a so-called short squeeze that sent the share price up more than 1,700 percent in mere weeks. The stock subsequently tumbled, losing nearly all its gains, only to resume its climb late last month. At the close of trading on Tuesday it remained up a remarkable 865 percent this year.
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March 24, 2021 at 05:47AM
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GameStop says it is considering selling additional shares. - The New York Times
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