GameStop considered profiting from the recent rise driven by Reddit in its stock price – but regulatory concerns have prevented the retailer from pulling the trigger, says a new report.
The Texas-based video game network has considered the possibility of selling new shares while novice traders on Reddit’s WallStreetBets forum raised their share prices in their war against short selling hedge funds, Reuters reported on Thursday. .
GameStop contained the issue of shares, although it filed with the SEC in December to sell up to $ 100 million in shares. It did not exercise that option amid the recent market craze, according to Reuters.
That sale could have raised hundreds of millions of dollars that GameStop could have used to pay its heavy debt, which was $ 216 million on October 31, the report said.
But GameStop finally concluded that the timing of the demonstration created many potential regulatory and logistical headaches, according to Reuters, which cited three unidentified people familiar with the matter.
The company would have to release preliminary earnings information 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 was coming to an end when its stock peaked at $ 483 in the last week of January, and it was not scheduled to release its earnings report for the three-month period for several more. weeks, the news agency reported.
To complicate matters further, the SEC said it would look at how companies sold shares to capitalize on “Reddit’s recovery” and asked companies to provide investors with more information about potential risks, the report says.
GameStop’s shares fell about 3.5 percent to $ 49.39 at 11:56 am on Thursday – almost three times their price at the time of the company’s order in December, but have dropped significantly from the peak of the Reddit.
GameStop did not immediately respond to a request for comment on Thursday.