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GameStop (GME) +10% as 5 million share sale raises $1.1bn in proceeds
GameStop (GME) shares advanced 10% in Tuesday’s trading after the video game retailer raised more than $1.1bn in a share sale designed to generate proceeds for “growth initiatives”.
GameStop wanted to capitalise on its meteoric rise in popularity this year following the Reddit-driven ‘meme’ stock frenzy that has seen amateur traders take on larger hedge funds.
The Texas-based retailer announced in its Q1 report earlier this month that it would sell 5 million common shares for “general corporate purposes”, as well as expansion and supporting a “strong balance sheet”.
The ‘at-the-market’ offering went ahead early on Tuesday as every share was sold and $1.126bn was raised in gross proceeds.
GME then traded higher when markets opened, rising 10.41% to $220.40 on the Nasdaq, which extended its gains to more than 1,000% for the year-to-date.
GameStop delivered solid returns in early June when its adjusted loss of $0.45 per share was much better than the Wall Street consensus as revenue jumped 27.5% to $1.3bn.
While short sellers have been burnt by traders buying cheap stocks recently, data from S3 Partners shows that there is still strong demand in the short market for GameStop.
Other companies were also making gains on Tuesday, including chipmaker Nvidia (NVDA), which rose 2.28% to $753.90 during the morning on a rating and price target upgrade from Raymond James.
Analyst Chris Caso pivoted to a “strong buy” after stating that Nvidia is leading the way in the semiconductor market “for growth over the long term”.
Peloton (PTON) also climbed 4.44% to $112.19 after the exercise equipment company launched a new wellness program for businesses in several countries, including the UK and the US.
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