GameStop slumps as 'Roaring Kitty' kicks off livestream (updated)

KOSS

07/06/2024 17:50

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      GameStop announces plans to raise more than $3 bln
    

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      Company releases Q1 earnings ahead of schedule
    

  
 (Adds details and quotes from livestream in paragraphs 3-5)
    By David Randall and Sruthi Shankar
       June 7 (Reuters) - GameStop stock influencer Keith Gill,
known as "Roaring Kitty," kicked off his first livestream in
three years on Friday as the videogame retailer's shares dropped
around 30% in volatile trading after it announced a share sale
to raise up to $3 billion.
    Shares of GameStop  GME.N , which also reported its
quarterly results four days ahead of schedule on Friday, shot up
nearly 50% the day before after Gill, the key figure behind an
eye-popping rally in the struggling company's stock in 2021,
posted on YouTube about the upcoming livestream.
    On the livestream, Gill said he was confident in GameStop
billionaire CEO Ryan Cohen.
        "I believe this guy," he said about Cohen. "It's kind of
based on feeling."
  
        GameStop is “right-sizing” the ship and cutting costs to
stabilize the legacy business and “now it’s all about the
transformation,” he said. 
  
    The company said it would sell up to 75 million shares, but
did not respond to a request for more details on the timing of
the capital raise and the reason for the early release of its
earnings report.
    "There's an old saying: feed the ducks while they're
quacking and certainly the ducks are quacking very loudly for
GME right now," said Steve Sosnick, chief market analyst at 
Interactive Brokers.
    "That's part of the reason why the company pushed its
earnings date forward, because there were rules against selling
stock ahead of a major corporate announcement like earnings."
    
    A spokesperson for the U.S. Securities and Exchange
Commission declined to comment on whether it was reviewing the
share sale. 
    In 2021, Gill's championing of GameStop helped its shares
rally by as much as 1,600% before they tumbled. He won a
cult-like following among some investors and notoriety with
others.
    Gill has helped attract a flood of retail cash to the
beleaguered bricks-and-mortar retailer with his bullish case on
Reddit posts and YouTube streams where he often appeared wearing
a bright red pirate bandana.
    But after drawing congressional and regulatory scrutiny for
his role in the extraordinary saga, Gill quickly disappeared,
albeit much richer thanks to his GameStop investment, which at
one point touched $48 million in value.
    His apparent return has sent GameStop shares soaring in
recent weeks. They rose nearly 150% since May 13, when an
account on X linked to Gill began posting memes that some
investors viewed as a sign of him being bullish on the company. 
    Just last month, GameStop said it made more than $900
million by selling 45 million shares as it took advantage of the
revival meme-stocks rally.
    "Strike while the iron is hot. AMC was applauded for making
use of their stock price surge to clean up its balance sheet, so
it's not surprising that GameStop would take a page from their
playbook," said Brian Jacobsen, chief economist at Annex Wealth
Management.
    Theater chain AMC Entertainment  AMC.N , also a retail
darling, completed a $250 million "at-the-market" share sale
during the meme-stock craze last month.      

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GameStop's wild ride since "Roaring Kitty" comeback    https://tmsnrt.rs/3KuBu6W
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 (Reporting by David Randall and Chuck Mikolajczak in New York;
Sruthi Shankar, Shristi Achar A, Jaspreet Singh and Johann M
Cherian in Bengaluru; additional reporting by Christine Prentice
in New York
Editing by Ira Iosebashvili, David Gregorio, Arun Koyyur and
Marguerita Choy)
 ((David.Randall@thomsonreuters.com; 646-223-6607; Reuters
Messaging: david.randall.thomsonreuters.com@reuters.net))