Why GameStop Couldn’t Capitalize On Its Reddit-Fueled Stock Rally

Despite GameStop’s stock being driven as high as $483 a share in the wild Reddit-fueled rally at the end of January, the retailer itself was poorly positioned to take advantage of the unprecedented event. The company was unable to sell off any stock when prices peaked due to regulatory concerns, according to sources cited by Reuters.

Theoretically, GameStop could have raised much-needed revenue through a stock sale when its stock peaked at over $400 a share, raising revenue towards its $216 million debt and investing in an ecommerce pivot–but it didn’t. Sources familiar with the matter said that GameStop explored the possibility of selling off stock during the rally, but ultimately decided not to.

The biggest issue was that GameStop was essentially in the middle of a fiscal quarter, and hadn’t yet been able to report financial results for that quarter. Thanks to U.S. Securities and Exchange Commission regulations, the company could have found itself in hot water had it sold off shares without updating investors on its latest earnings figures.

Continue Reading at GameSpot

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