GameStop says it raised $2.14 billion in share sale. Roaring Kitty memes continue.

By Barbara Kollmeyer and James Rogers

Meme stock falls in premarket trades Wednesday

GameStop Corp. said it raised around $2.14 billion in a share sale, with the videogame retailer and meme stock saying it may use the proceeds for mergers and acquisitions.

Shares of GameStop (GME) were down 4.6% in premarket trading, after climbing 22.8% on Tuesday for the biggest gain since June 6, when the stock rose 47.5%.

In a statement on its website on Tuesday, GameStop said it had sold the maximum 75 million shares it had announced to sell on June 7, when it also released earnings showing a surprise revenue drop.

Related: Roaring Kitty shows he's holding his GameStop position as stock rallies

The company said it had reached an agreement with Jefferies to sell those shares pursuant to an existing open-market sale agreement through which it has already sold 45 million shares.

Tuesday's gains came after social-media posts appeared to show influential trader Keith Gill, also known as Roaring Kitty, holding a big stake in GameStop. Some also pointed to the fact the company had stopped selling shares as a rationale for the rally.

"While GameStop's 2021 price rally was short-lived, it was hard and fast enough to make some people a lot of money if they managed to get out at the top. Plenty of people might hope for a repeat of this rally and have taken Gill's reappearance as a signal to follow the crowd, hence the big interest in buying GameStop shares in its equity offer," said AJ Bell investment director Russ Mould.

Related: GameStop's stock slides as investors await next moves for meme stocks

Wedbush lowered its GameStop price target following the share sale. "Given that GameStop's share price closed at $46 on June 6, we had assumed it would complete the sale at an average price of $40," wrote Wedbush analyst Michael Pachter, in a note released Tuesday. "Instead, the shares declined precipitously on June 7, reflecting news from Reddit following a rambling presentation by Roaring Kitty (Keith Gill), closing that day at $28. We are lowering our price target to $11.00 from $13.50 to reflect lower-than-expected proceeds from the share offering."

Wedbush maintained its underperform rating for GameStop. Of two analysts surveyed by FactSet, one has an underweight and one has a sell rating for GameStop.

On Wednesday Citron Research said it is no longer short GameStop. "It's not because we believe in a turnaround for the company fundamentals will ever happen, but with $4 billion in the bank, they have enough runway to appease their cult like shareholders," Citron Research wrote on X, formerly known as Twitter. "Despite Wedbush setting an $11 target today, we respect the market's irrationality. After all, Dogecoin remains a $20 billion entity. While the increased share count might temper the mob mentality, Citron will be watching from the sidelines for now."

Related: Citron Research's Andrew Left says he is shorting GameStop again after his 2021 short flopped

Citron also described Friday's Roaring Kitty YouTube livestream - his first in three years - as "an insult to the capital markets."

Citron Research took a 100% loss on a GameStop short in 2021. Last month the fund's founder Andrew Left said he started shorting GameStop again.

Late Tuesday Gill made his latest cryptic post on X, formerly known as Twitter. The image from the TV show "The Office" shows Steve Carell as a young version of his character Michael Scott meeting his former boss Ed Truck, portrayed by the late Ken Howard. In Gill's meme, a "Roaring Kitty" peeks out of Scott's pocket, while the "power button" symbol is superimposed on Truck's pocket.

Related: GameStop's stock suffers worst day since 2021 despite Roaring Kitty livestream

The website Know Your Meme describes the image of young Michael Scott shaking Ed Truck's hand as a "memorable moment" from "The Office" series. "People have used the image to express feelings of meeting an elder when they were young," the website adds. As with other Roaring Kitty posts, users on social media were attempting to decipher its meaning.

Gill made his return to social media last month with a flood of cryptic posts on X that used a host of movies and TV show memes, such as "Star Wars," "Braveheart," "E.T," "Seinfeld," and "Peaky Blinders." The trader's social-media return sparked a rally that sent shares of GameStop and AMC Entertainment Holdings Inc. (AMC) and others skyrocketing. Both stocks featured prominently in the 2021 meme-stock frenzy, in which Gill was an influential figure.

On Sunday Gill posted a still image from the Batman film "The Dark Knight." The image showed the Joker, played by the late Heath Ledger, preparing for a bank heist - the first scene in the movie. In the posted image, a cat mask has been superimposed on the clown mask that the Joker carries.

Related: 'Buckle up!' Social media reacts to news of Roaring Kitty's first livestream in 3 years.

On Tuesday Roaring Kitty posted a meme based on the children's cartoon "The Amazing World of Gumball."

A Reddit post on June 2 from an account associated with Gill appeared to show him holding a big stake in GameStop. Subsequent posts, including one on Monday afternoon, showed Gill holding the position. Gill also showed a screenshot of the same positions during his closely watched YouTube livestream Friday. Speaking during Friday's livestream, a jovial Gill pointed to his recent flood of memes. "I hope that you think some of them were funny," he said, describing himself as a "professional larker."

GameStop shares are up 73.9% in 2024, outpacing the S&P 500 index's SPX gain of 12.7%.

Louis Goss contributed.

-Barbara Kollmeyer -James Rogers

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06-12-24 0919ET

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