Shares fall as company says it may sell stock to fund transformation

Investors are finally getting a look at GameStop‘s fundamentals following a Reddit-fueled trading frenzy earlier this year.

Here’s what the company did after the bell Tuesday.

• It released fiscal fourth-quarter results that missed Wall Street’s estimates on the top and bottom lines.
• In its latest executive shake-up, the company named former Amazon and Google executive Jenna Owens as its new chief operating officer.
• And in a hint of the transformation that’s got some investors excited about the stock, the company said global e-commerce sales jumped 175% last quarter and accounted for more than a third of its sales in the period.
• GameStop also acknowledged in a filing that it was considering selling additional equity shares.
• During a much anticipated earnings conference call that at one point reached maximum capacity, the company declined to answer questions.

The stock initially traded higher after the bell, but was last down about 12% with traders likely reacting to the potential share sale, an action many investors and analysts thought would be prudent given the Reddit-fueled run-up in the stock. There is also likely some disappointment about the lack of detail from the conference call without any questions answered.

“Since January 2021, we have been evaluating whether to increase the size of the ATM (at-the-market) Program and whether to potentially sell shares of our Class A Common Stock under the increased ATM Program during the course of fiscal 2021, primarily to fund the acceleration of our future transformation initiatives and general working capital needs,” a filing from the company said.

For the fiscal period ended January 2021, GameStop earned $1.34 per share on revenue of $2.12 billion. Wall Street was expecting earnings per share of $1.35 on revenue of $2.21 billion, according to Refinitiv’s average of the six analysts.

GameStop’s fiscal fourth-quarter earnings typically make up the majority of the company’s yearly earnings, boosted by holiday sales. The company’s same-store sales rose 6.5% last quarter.