Please read the Wall Street Journal article below and answer the questions. PLEASE ANSWER ASAP TO GET A REVIEW~

GameStop to Sell Stock After Redit-Fueled Trading Frenzy

Videogame retailer says it could raise hundreds of millions of dollars from investors to help support its turnaround plan

By

Dave Sebastian

Updated April 5, 2021 11:42 am ET

GameStop (Links to an external site.) Corp. GME -6.99% (Links to an external site.)said it could raise hundreds of millions of dollars from stock sales in the coming months, as the videogame retailer turns to public markets to help support its turnaround plan.

The company said Monday that it would sell up to 3.5 million shares, adding that the timing and size of any stock sale would involve various factors.

Though it has had the ability to sell up to $100 million in stock since December, GameStopunlike theater chain AMC Entertainment Holdings (Links to an external site.) Inc. had resisted raising cash in that manner as retail investors helped fuel a remarkable run up in the companys stock price. Investors communing on REDIT also boosted AMC shares.

GameStops stock traded (Links to an external site.) under $3 apiece in April last year as the pandemic prompted the temporary closure of the companys bricks-and-mortar locations. The shares ended 2020 at just below $19.

Juiced by individual investors enthusiasm, GameStop shares peaked at $483 in intraday trading Jan. 28only to trade just below $39 about three weeks later. On Monday, the shares fell 2.4% to $186.95 after the company disclosed the offering and issued a sales update.

Last month, GameStop said it had been evaluating whether to increase the size of its stock-selling plans.

A GameStop representative declined to comment beyond the news releases the company issued.

The stock offering could dilute the companys shares by up to 5%, Telsey Advisory Group retail analyst Joseph Feldman said. Having a pile of cash would help the company find acquisition targets down the road, Mr. Feldman said. The company had $508.5 million in cash and cash equivalents as of Jan. 30, according to its latest annual report.

Theyre in an enviable market position right now with regard to their share price, Mr. Feldman said.

The Grapevine, Texas, company said its sales grew roughly 11% for the nine weeks ended April 3 from the comparable period a year earlier, when the coronaviruss emergence forced store closures. GameStop had roughly 13% fewer stores this year compared with a year earlier.[1]

GameStop is working to transform its decades-old bricks-and-mortar business to become more technology-centric (Links to an external site.). The company added (Links to an external site.) Chewy (Links to an external site.) Inc. co-founder Ryan Cohen to its board before GameStops furious rally earlier this year after the tech executive urged the company to focus on e-commerce and reduce its store count among other initiatives. Mr. Cohen, one of the companys largest shareholders, was appointed in March to lead a board committee dedicated to transforming (Links to an external site.) the retailer.

The company has been shuffling its management ranks and is in the process of retooling its board, as the majority of directors have informed the company that they plan to step down from the panel later this year. Earlier this month, the company said Chris Homeister, the merchandising chief, plans to resign (Links to an external site.) due to his diminished responsibilities. GameStop has hired several executives from Amazon.com (Links to an external site.) Inc. and Chewy for top posts.

In GameStops most recent quarter, which included the holiday-shopping season, sales fell slightly from a year earlier as coronavirus-related closings weighed on its operations. The company, however, has since pointed to improving sales trends (Links to an external site.). Chief Executive George Sherman has said GameStop will benefit from initiatives such as expanding its product selection to make it less dependent on the releases of new gaming consoles from the likes of Sony (Links to an external site.) Corp. and Microsoft (Links to an external site.) Corp.

A slate of coronavirus-stricken companies have turned to the public markets to keep afloat during the Covid-19 pandemic. AMC raised enough cash (Links to an external site.) to take the prospect of an imminent bankruptcy filing off the table, and its stock became a darling of the retail-investing community. AMCs stock price has more than quadrupled so far this year.

Discussion questions:

• What factors fueled the market frenzy and high volatility of GameStop stock in early 2021?
• Why is GameStop issuing equity in April 2021?
• How has GameStop performed financially in the most recent quarter?
• Why was the companys shares fell after it disclosed the offering and preliminary sales figures?
• Compare and contrast GameStop's and AMC's responses to recent, Redit-oriented, investor enthusiasm.
• Comment on the stock market efficient hypothesis (EMH) based on the redit-fueled trading frenzy.