GameStop stock steady after short seller quit

GameStop (LSE:GME) shares steadied above $30 on Wednesday, following confirmation of its $2bn share sale and after short-seller Citron Research exited its position.

Citron reportedly claimed it was abandoning its position because it “respected the market’s irrationality”.

Changing hands at $30.97, GameStop was up 48 cents or 1.57% in Wednesday’s dealing.

It means that despite all the wild swings and volatility of recent weeks, the GameStop price is now a meagre 1.8% from where it was this time a month ago.

GameStop late on Tuesday confirmed it closed its ‘at the market’ (ATM) share sale, amidst softening share prices, to raise over $2.1 billion of new proceeds.

The game retail sold 75 million new shares at an average share price of $28.50.

GameStop’s brokers were selling the shares against a volatile market backdrop, and the circus of ‘meme trading’, social media and the Roaring Kitty livestream.

“Given that GameStop’s share price closed at $46 on June 6, we had assumed it would complete the sale at an average price of $40,” Wedbush analyst Michael Pachter said in a note.

“Instead, the shares declined precipitously on June 7, reflecting news from Reddit following a rambling presentation by Roaring Kitty (Keith Gill), closing that day at $28.

“We are lowering our price target to $11.00 from $13.50 to reflect lower-than-expected proceeds from the share offering. Our revised price target reflects roughly $9.50 per share of net cash, plus a going concern value of roughly $1.50 per share.”

Wedbush has an ‘underperform’ rating for GameStop.

GameStop previously said it intended to use the proceeds for general corporate purposes, potentially including acquisitions and investments.