GameStop stock drops 26% after plan to sell 45 million shares

Video game retailer and meme stock GameStop has filed to sell up to 45 million of its GME shares, which would increase its total number of shares by up to 15%.

This announcement came on the same day that GameStop released its preliminary first-quarter results. This showed that net turnover fell by 30% compared to last year. Despite the decline, the company’s net loss is expected to be up to $23.5 million less than last year, although net losses could still reach $37 million.

Bad news for investors

If GameStop manages to sell 45 million shares at the current market price of $227, the company could rake in up to $990 million. However, trading such a large number of shares will affect the price of the stock. In pre-market trading, shares fell as much as 20% overnight, and the situation did not improve after the opening bell.

At the time of writing, GME is trading at around $21, which represents a loss of 24% compared to Thursday’s closing price.

GameStop reacts to recent price swings

The company acknowledged recent price swings but avoided mentioning Roaring Kitty, the r/WallStreetBets Reddit community, or its status as a “meme stock” by name.

“Our common stock has experienced extreme volatility in price and trading volume,” GameStop stated in the prospectus supplement. “We have not experienced any material changes in our financial condition or operating results that would explain this price volatility or trading volume.”