This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
Rating agency S&P Global has placed the B- rating of GameStop Corp on CreditWatch Positive after it announced a secondary equity offering of ~3.5 mn shares. Gamestop aims to cash in on the increase in its share prices after the Reddit-driven rally in its shares earlier this year. The sale of shares by the US based video gaming company will infuse adequate liquidity to cover its debt and is expected to lead to a business transformation. According to S&P “A successful offering would provide additional funds for GameStop to invest in its digital strategy to adapt its business model to evolving market conditions.” The rating agency emphasized that the proceeds from the share offering will help Gamestop reinvent its business model. The sale of the 3.5mn shares which represents ~5% of its outstanding stock could fetch GameStop up to $654mn based on Monday’s closing price of $186.95. Gamestop had also reported a 11% increase in its sales through 9 weeks ended April 3, 2021. While Gamestop stands to benefit from the demand for software and accessories in the near-term, the rating agency took note of the weaker than expected 4Q results and the risks to its strategy as the company transitions to the digital gaming strategies from the physical games.