GameStop is now selling 20 million shares for future innovation and other ‘general corporate purposes’, the company announced.
As of Wednesday, GameStop’s market capitalization fell to $8.5 billion, down from $10.5 billion.
The company’s recent financial report revealed net sales of $798 million for the second quarter, a 31% decline from $1.1 billion during the same period last year and below analyst expectations of $896 million, according to FactSet.
Despite the drop in sales, GameStop reported adjusted earnings of 1 cent per share, surpassing estimates that predicted a loss of 9 cents per share.
In response to its financial challenges, GameStop announced plans to sell up to 20 million shares, which will be used for “general corporate purposes.”
This includes funding future acquisitions and investments, as well as identifying stores for potential closure.
Michael Pachter, an analyst at Wedbush Securities, criticized GameStop’s lack of a clear strategy for utilizing its assets.
He suggested that, given the circumstances, it might be advisable for the company to consider closing all its stores and operating as a bank instead.
Earlier this year, Keith Gill’s return to social media reignited interest in GameStop shares, following his pivotal role in the 2021 stock rally.
Gill expressed his belief in the company and announced a substantial $160 million position.
In July, CEO Ryan Cohen stated that the company would avoid making “promises or hype things up,” indicating a more cautious approach moving forward.
GameStop shares are up nearly 24% this year-to-date.
While the gaming industry increasingly shifts to digital platforms, GameStop is committed to preserving classic gaming experiences.
The video game retailer is transforming some of its stores into “GameStop Retro” locations, focusing on older consoles and games for nostalgic players.
In an announcement on X, the company highlighted several iconic consoles, such as the Wii and Xbox 360, which have been overshadowed by newer models like the Nintendo Switch and Xbox Series X.
These retro locations will also offer a selection of classic games from popular franchises, including Pokémon, Mario Kart, Halo, and Grand Theft Auto.
GameStop has not disclosed how many stores will be designated as retro locations or whether this initiative will be a permanent change or a temporary promotion.
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Also Read: NYSE Is Now Reporting A GameStop Price Glitch
Other Economy News Today
Citadel is now fighting the SEC on the market surveillance system known as CAT, which enables regulators to track trading activity.
Citadel Securities is spearheading an industry pushback against a proposal from exchanges like the New York Stock Exchange and Nasdaq that would require traders to help fund a new market surveillance system, known as the Consolidated Audit Trail (CAT), which has already incurred nearly $1 billion in costs.
Brokers are urging regulators to halt new billing schedules that would mandate their financial contributions to the CAT system, which serves as a comprehensive record of all activity in U.S. equities and options markets—often compared to a “Hubble Telescope” for financial markets.
Until now, exchanges have covered the costs of the CAT.
However, if the U.S. Securities and Exchange Commission (SEC) does not intervene soon, brokers will start receiving bills from the exchanges beginning Tuesday, as the exchanges seek to recover a portion of the promised costs.
The CAT was established after the 2010 flash crash, which made it difficult for investigators to determine the cause of a market drop that erased nearly $1 trillion in value.
The system has been fully operational since 2022, according to Financial Times.
The SEC directed national exchanges and Finra, which oversees brokers, to create the CAT, with the expectation that the trading industry would eventually bear a significant share of the expenses.
Last year, the SEC approved a plan requiring broker-dealers to cover two-thirds of the costs, while exchanges would cover the rest.
Initial payment plans were submitted in January but were suspended pending review, which has yet to be completed.
Last month, exchanges and Finra withdrew their initial payment plans and submitted revised ones with minor changes.
Unless the SEC issues another suspension, brokers will receive bills in October based on September’s trading volumes.
Several regulatory filings and letters from industry groups, including Citadel Securities, Virtu Financial, the American Securities Association, and Sifma, have urged the SEC to suspend the billing process.
Citadel Securities, led by Ken Griffin, warned the SEC that it might seek legal action if the billing is not halted by next week.
Also Read: “The Game is Rigged”, Says Ex-Citadel Data Scientist
The company criticized the new filings as an attempt to extract significant amounts from broker-dealers.
Citadel previously challenged the legality of the CAT funding model in a Florida court, in partnership with the ASA.
That case is still ongoing.
Exchange representatives, including those from the NYSE, Nasdaq, and Cboe Global Markets, declined to comment, as did Finra and the SEC.
However, exchange officials noted that they were instructed by the SEC to implement the CAT and that cost-sharing with the industry was always part of the plan.
They argue that increasing trading volumes have contributed to rising costs.
One executive involved in the CAT project stated, “We’re just recovering our costs. There’s no profit here,” emphasizing that the industry had been resistant to funding the system.
Brokers have raised concerns not only about the costs but also about accountability for any costly missteps during the CAT’s development, as well as the system’s annual operating budget, which now nears $200 million—about five times the original estimates from 2016.
In a market where big player such as Citadel have manipulated prices in their favor, reported inaccuracies, and have taken advantage of the industry — opposing any regulatory means that track its trading activity has been part of their mission for years.
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Also Read: BlackRock Is Now Hit With 54 Counts of Securities Violations
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