GameStop shares drop on stock sale plan

GameStop is seeking to take advantage of the 10-fold price spike in its shares this year, but Wall Street doesn’t like that idea. Shares of the video game retailer dropped sharply Monday after it said it may sell up to $1 billion worth of additional stock.

The company said in a filing with regulators it’ll sell up to 3.5 million shares and use the proceeds to accelerate its shift to e-commerce. That amounts to about 5% of its outstanding shares, according to Refinitiv. Analysts note a share sale would dilute the value of the company’s stock.

GameStop was the epicenter of a trading frenzy that saw amateur investors drive up the price of so-called “meme stocks” featured in Reddit chat groups. Others such as cinema operator AMC and carrier American Airlines have already sold shares.

News of GameStop’s latest plan to sell more shares sent the company’s stock down as much as 13% in early trading Monday before paring some of that loss.