GameStop spikes 23% after plans to strengthen its balance sheet by retiring debt early
- GameStop surged as much as 23% on Wednesday after it announced plans to strengthen its balance sheet.
- The video game retailer plans to retire $216 million worth of debt that was set to expire in 2023.
- GameStop recently launched an at-the-market offering, giving the company flexibility to raise cash by selling its stock in the open market.
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Shares of GameStop surged as much as 23% on Wednesday after the video game retailer announced plans to strengthen its balance sheet by retiring debt early.
GameStop plans to retire $216 million worth of debt that was set to expire in 2023 by the end of this month, using cash on hand. The company now has just $49 million in short-term debt on its balance sheet.
The video game retailer could be taking advantage of its sky-high stock price, which surged to a record high of $483 in January amid an epic short-squeeze that was fueled by a band of Reddit traders.
GameStop said earlier this month that it launched an at-the-market equity offering, giving the company the ability to sell up to 3.5 million shares into the open market as it sees fit. This type of offering allows GameStop to take advantage of upside volatility in its stock price to limit volatility.
The company said it would use proceeds from the offering to strengthen its balance sheet and accelerate its transformation into a specialized e-commerce company.
That transformation is being led by activist investor Ryan Cohen, who is set to become chairman of GameStop's board of directors and who previously led online-pet retailer Chewy to become a multi-billion-dollar company.
Shares of GameStop have held up relatively well since the peak of its January short-squeeze. While the stock is down 66% from its record-high, it is still up 776% year-to-date, based on its current prices at 1:56 pm on Wednesday.
