GameStop falls after securities filing that allows for potential shareholder dilution
GameStop is lower in early trading after filing paperwork that lays the foundation for the video game and collectibles retailer to raise money “from time to time” through the sale of stock, debt, and related securities.
Importantly, this filing does not include a specific intention to issue stock and dilute shareholders imminently, but merely provides management with the ability to do so at their discretion. The potential for future dilution may be front of mind for investors this morning, however, given the shares' dip.
The filing says that unless stated differently in a specific fundraising endeavor, management plans to use any proceeds that may be received in the future “for general corporate purposes, including making investments in a manner consistent with our investment policy and potential acquisitions. If we decide to use the net proceeds from a particular offering of securities for a specific purpose, we will describe that in the related prospectus supplement.”
Given GameStop’s history, which has been punctuated by a some huge spikes during which the company has been able to successfully raise money, it would be irresponsible to not have a standing shelf registration that lets management raise capital during periods of unbridled enthusiasm.
