When video game retailer GameStop (GME -4.95%) became a favorite of traders on Reddit's WallStreetBets forum earlier this year, its stock price skyrocketed. Many wondered if, or when, the company would take advantage of the stock's ascent to raise capital. Today, GameStop finally answered that question by announcing it plans to offer up to 3.5 million shares. The company will sell the shares on no set schedule, with an "at-the-market" equity offering program.
GameStop also told investors today it expects sales for the first nine weeks of its fiscal year, ended April 4, to be 11% higher compared to the prior-year period. It added that sales for the month of March rose 18% versus last year.
GameStop said the proceeds from its stock sales will be used to "accelerate" its transformation away from a brick-and-mortar business toward an online model and to strengthen its balance sheet.
GameStop shares have been very volatile since late January when it became the Reddit crowd favorite, as traders forced a short squeeze to move the stock higher. The stock began the year under $20, bounced to about $350, and then went back down to $50 before rebounding up to $200. Of the stock sales, GamesStop said in a statement, "The timing and amount of any sales will be determined by a variety of factors considered by the company."
Investors won't know what amount of capital the company will raise from the sales until GameStop files the results.