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GameStop shares drop 13% after announcing plan to sell up to 3.5 million shares

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A GameStop store is pictured in New York, January 29, 2021.

Carlo AllegriI | Reuters

GameStop shares fell 13% on Monday after the video game retailer said it may sell up to 3.5 million shares as it tries to take advantage of the stock price surge following a Reddit-driven trading frenzy earlier this year.

The share sale would fetch the company more than $670 million at Thursday’s closing price of $191.45. The shares have gained more than 900% so far this year and had at one point hit $482.95 as retail traders bet against Wall Street hedge funds that had shorted the stock.

GameStop said it would use the proceeds from the share offering to speed up the shift in its business model to e-commerce, a plan that is being led by a top shareholder and board member Ryan Cohen.

The company said it has filed the at-the-market equity offering prospectus with the U.S. Securities and Exchange Commission.

Separately, GameStop said global sales for the nine-week period ending April 4 rose about 11%.

Its shares were down at $166 in premarket trading.

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