GameStop raises more than $1 billion, Lordstown ‘evaluating strategic partners’, Plug Power’s mixed quarter

Myles Udland, Brian Sozzi, and Julie Hyman breakdown Tuesday’s early market movers, which include: what’s next for GameStop after raising more than $1 billion in its latest share offering, Lordstown looking for funding through a ‘strategic partner’, and Plug Power moving higher after mixed Q1 results.

Video transcript

MYLES UDLAND: All right, let's turn our attention now to the main meme name, which continues its process in figuring out what the future of its business is going to be now that it's worth $13 billion, up from around $300 million this time last year. That, of course, is GameStop. Stock is up about 7% this morning, $214 per share in the premarket. The company out before the market today announcing that it has completed its at the market equity offering program. Company sold five million shares, bringing in proceeds right around $1.12 billion. That's before the fees that, of course you're paying to invest in banks and the commissions they get on that sale.

But basically, not basically, but that math implies that GameStop getting this deal done, $225 per share. Now we've seen the stock come down, Sozzi, a little bit over the last couple of weeks, but I think look, to me, and we haven't even talked about yesterday's morning brief yet, I just want to let everyone know, this is going to be tomorrow's Morning Brief. This is why the meme trade matters. Because eventually on a long enough time frame, you can have a transformative, a transformative transaction for your actual business because the stock price has been bid up by an internet joke.

BRIAN SOZZI: Myles, I'm still trying to figure out where and how GameStop is going to use $1.1 billion. I know there's been some chatter on the street, perhaps they use a portion of that, not a large chunk, but a portion to get out of some bad store leases for them. Again, this is a company that operates thousands of stores around the globe. It's really no reason why they continue to operate so many stores, but still, that is a large chunk of money, Myles and Julie, that it's unclear how they're going to allocate that. But that ultimately now falls onto the doorstep of new CEO Matt Furlong. His first day on the job at GameStop was yesterday.

JULIE HYMAN: Yeah, I mean, I'm kind of with you, Sozzi, in terms of, OK, it can be transformative in terms of giving them all this cash. But is it transformative until they have actually done anything with that cash and made it transform the company? And that's sort of the TBD on this whole situation that we have to wait to find out, Myles.

MYLES UDLAND: Yeah, I mean, the old adage, you don't want to have, you don't want to raise money you don't need. More of a venture view than a traditional equity market view. And I think that that might hold here. But I mean, I don't know, a year ago, to raise this amount of capital, the company would have had to sell about 250 million shares. And now they sold five million shares? That, to me, is basically free money.

So I don't know, and the market, look, has made its ruling on this to some extent, that the future of GameStop is going to be considerably better than the past has been. And I mean, we go back in time to February and you had Keith Gill, most ardent bull out there, saying that $40 to $50 was a fine level for GameStop. But that's a 10x from where he started his thesis.

So sure, $200 some odd per share, there's a lot of future growth that's already baked in and assumed and is going to be potentially very difficult for them to achieve. But when you dilute shareholders by five million shares to raise the same amount of capital that would have taken 250 million shares a year ago, I feel, Sozzi, like that's kind of free money. And I don't feel the need to know what they're going to do with it, because they just raised a billion dollars not really doing anything.

BRIAN SOZZI: Well, Myles, maybe GameStop just teams up with Wingstop slash ThighStop and turns itself into a restaurant. Why not? Why not? They're both I guess cut from the same cloth. One's a stop, the other's a stop.

MYLES UDLAND: We got Wingstop CEO coming up at 9:45, and I know, I mean Sozzi clearly is just focused on that segment. Once we get it, we'll talk about, we'll talk about, Sozzi, maybe the role that you played in the ThighStop brand, which of course, is the company's big news today.

JULIE HYMAN: Well, given--

MYLES UDLAND: Let's go to another--

JULIE HYMAN: --Given that he have 'em that idea, maybe, I don't know if he's listening right now, the Wingstop CEO. Maybe we've given him another good idea.

BRIAN SOZZI: I'm here to help, never hurt.

MYLES UDLAND: Soz, If you're the idea. so we just did the ThighStop to GameStop move, but look, if you have any video game ideas for Matt Furlong, anything besides a chicken restaurant inside the store?

BRIAN SOZZI: I think he needs to start selling groceries. You need repeat traffic in those mall stores. I want to be, I would like to see them maybe team up with the Whole Foods. Let's get some organic produce in GameStop stores.

MYLES UDLAND: All right. So Sozzi wants to take the billion dollars GameStop just raised and pivot the video game business not towards e-commerce, but towards food, a famously high margin business, the grocery industry, that one is. All right, let's talk about another name that is on the move this morning. Julie Hyman flagging this one for us. MicroVision, MVIS is the ticker. This has been a recent entrant into, we're almost in meme 3.0 territory here, but we'll still call it the 2.0 epoch for the meme trade, really led by the latest AMC surge. MicroVision has been caught up in this. This is a LiDAR company of course, as so many recent entrants to the market have been.

Company is out announcing a $140 million at the market offering, so the same program that GameStop used to raise capital. But they have dollar amount, not a share amount attached to that program, which they may go to from time to time as Jared Blikre has reminded us. Companies may already have the sale done when they come out with this announcement, but Julie, stock lower on the news, which is what you would expect. But clearly we're picking up a lot of steam here in companies that get their stock involved in the meme trade for reasons unrelated to their operations and then say, hey, let's use this to our advantage.

JULIE HYMAN: Right, exactly. And like you said, here it doesn't seem like the sort of meme sentiment is floating it quite as much as we've seen with others when they announce they're going to sell stock, and we see that more traditional reaction here. This may be a sort of trendy LiDAR company, but this is actually a much older public company. It has been on the public market for quite a long time, although it has sort of I guess pivoted its business to some extent.

So we'll see what MicroVision, I don't really have much to say beyond what you've said, that again, it's taking advantage of what's going on and we'll have to see what it does with it. I mean, I also, another meme stock that caught my eye, and I don't like many meme stocks, maybe it fits those criteria that we have talked about, but I don't know why exactly it caught Redditor's attention, and that's a little company called Torchlight, which just for the past couple of days has been at the top of our trending tickers. And it is up. You can see how much it's up over the past month, it's seen this surge. Just to show the premarket trading here this morning, it's not much changed, but yesterday was up 58%. It's an oil and gas company. I don't know. It's under $10 bucks a share, maybe that's what was the fueling. Who knows, Myles.

MYLES UDLAND: And another name, Julie, that you mentioned for us that's also on the move this morning, which is out with its earnings is Plug Power. I always get a kick out of Plug Power, because this is a stock that has lived many, many lives. If the tech bubble in the '90s was just one big meme trade, I mean, Plug Power, which is a hydrogen fuel cell company, was at the center of that. So the stock has, I mean, to say that it has mooned in the last year is certainly, or in the last year or so, more like two years, certainly appropriate. It was a $2 stock not too long ago, and now we see it's trading at $31 this morning.

The stock did trade considerably higher than that during the most recent market rally. It was up in the mid $60s. So it's kind of been cut in half from that. But if you look at the max chart on Plug Power per Yahoo Finance data, even after all the splits and everything, $1,000 per share back in February of 2000. So that is an interesting name for this whole market period. And another name, just want to continue the never ending updates on Brian Sozzi's favorite new company in the market, that is Lordstown Motors.

Sozzi, yesterday we talked about the turkey farming enthusiasm of the companies. He's the executive chairman member of the board, whoever's speaking now on behalf of the company, speaking inappropriately, out of turn, we should say, on behalf of the company, that came out yesterday. Now there's news the company is evaluating strategic partners for funding needed to stay in operations. You know, we've seen this news from GM and Ford recently, Soz, and remember, the Lordstown factory was a GM factory for a very long time. One wonders if that's the play here, that's the ultimate fate for Lordstown, because the development of the truck that they think is happening, I just cannot see coming to [AUDIO OUT] at the executive level.

BRIAN SOZZI: Yeah, Myles, I think that's right on. And I could do a quick comparison here. GM said last week, it's building two new battery factories in the United States. Now, to build out one of those facilities is about $2 billion. I have seen some reports that the Lordstown facility they have built out to build their electric truck, called the Endurance, that facility is valued at $3.3 billion, maybe perhaps a little bit more.

Now Lordstown's market cap is $1.7 billion. So I think any strategic investor would be coming in essentially to your point, with just interest in getting access to that facility, all the equipment in it, perhaps they just make batteries out of it and don't make the truck, unclear. But it's also unclear what strategic partners would step up and invest in a company that is clearly struggling from a financial perspective, struggling from a corporate governance perspective. And while I have you, I'll add my suggestion of a GameStop and Wingstop tie-up, getting great feedback on Twitter. Appreciate all that love out there.

MYLES UDLAND: It's the most important thing, that Twitter agrees with you on any one idea that we offer here on the program.