GameStop’s shares tank 12% after it plans a $1 billion stock sale

GameStop shares fell 12 per cent on Monday after the video game retailer said it may sell up to $1 billion worth of stock as it takes advantage of a dizzying rally in its stock on the back of a Reddit-driven retail trading frenzy.

The company said it would sell up to 3.5 million shares and use the proceeds to speed up the shift in its business model to e-commerce in an overhaul being led by top shareholder and board member Ryan Cohen.

At Thursday’s closing price of $191.45, the “at-the-market” sale could fetch GameStop up to $670 million. The firm, however, is not obligated to sell shares at that value since at-the-market programs allow firms to sell stock over a prolonged period of time.