GameStop considered cashing in on the recent Reddit-fueled rally in its share price, but regulatory concerns prevented the retailer from pulling the trigger, a new report said.
The Texas-based video game chain weighed in on the opportunity to sell new stock as budding traders on Reddit’s WallStreetBets forum raised the stock price in their battle against short-selling hedge funds, Reuters reported Thursday.
GameStop reportedly blocked the issuance of shares, even though it filed paperwork with the SEC in December to sell up to $ 100 million worth of stock. According to Reuters, it hasn’t exercised that option amid the recent market madness.
Such a sale could have raised hundreds of millions of dollars that GameStop could have used to pay off its hefty debt, which was $ 216 million on Oct. 31, the report said.
But GameStop eventually concluded that the meeting’s timing was causing too many potential regulatory and logistical headaches, according to Reuters, quoting three unnamed people familiar with the case.
The company would have had to release information about its earnings ahead of schedule to proceed with a stock offering in accordance with the rules of the Securities and Exchange Commission.
But GameStop’s last fiscal quarter drew to a close, just as stocks surged to a peak of $ 483 in the last week of January, and it wasn’t scheduled to release its three-month earnings report for several more weeks. . news agency reported.
To complicate matters, the SEC has said it will investigate how companies sold shares to take advantage of the “Reddit rally,” and has asked companies to provide investors with more information about potential risks, the report said.
GameStop’s shares fell about 3.5 percent to $ 49.39 as of 11:56 a.m. Thursday – roughly tripling their price at the time of the December filing, but significantly lower than the peak of the Reddit rally.
GameStop did not immediately respond to a request for comment on Thursday.