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GameStop<\/a> hit the jackpot.\u00a0Roaring Kitty\u2019s favorite meme stock walked off with a record $2.1 billion in gross cash\u2014even adjusted for inflation, exceeding the amount it raised in two separate share sales in 2021 combined. <\/p>\n And GameStop has 38-year-old social media trader Keith Gill to thank for it. \u00a0<\/p>\n In anticipation of a looming short squeeze triggered by last week\u2019s definitive return of Roaring Kitty, a soaring stock price gifted the company a\u00a0perfect opportunity<\/a>\u00a0to unload 75 million shares at an average price of $28.50 each on a market all too desperate to get their hands on more.\u00a0<\/p>\n While it may have ruined Gill\u2019s bid to become the first person to become a billionaire on paper during a livestream<\/a>, it\u2019s a life preserver for the struggling brick-and-mortar games retailer.<\/p>\n Due to the terms of the offering, the loss-making company enjoys widespread discretion to do what it sees fit with the company\u2019s windfall gain\u2014no strings attached. <\/p>\n It was a second major victory for chairman and CEO Ryan Cohen after a court\u00a0dismissed an unrelated lawsuit<\/a>\u00a0hanging over the activist investor\u2019s head.<\/p>\n \u201cGameStop intends to use the net proceeds\u2026for general corporate purposes, which may include acquisitions and investments,\u201d the company said in a\u00a0statement<\/a>\u00a0on Tuesday, a common boilerplate phrase that grants management broad scope.<\/p>\n Cohen can thank his lucky stars that Roaring Kitty, alias Keith Gill, reemerged out of the blue three years after the latter celebrated an epic victory over Wall Street hedge funds like Melvin Capital, which got burned speculating on a drop in the price of GameStop shares.<\/p>\n Communicating at first entirely through memes, Gill signaled he was back to finish the job on May 13.<\/p>\n On June 2, he uploaded to Reddit, where he posts under the account DeepFuckingValue, a screenshot of his E*Trade account showing he had quietly amassed a long position in stocks and options worth over $181 million.\u00a0<\/p>\n While this may have reduced GameStop to little more than the financial equivalent of a ball of yarn, Cohen seized on Roaring Kitty\u2019s return from retirement to make hay.\u00a0<\/p>\n Together with a\u00a0stock sale<\/a>\u00a0in May that saw 45 million new shares issued\u2014only days after the cryptic memes were first posted\u2014GameStop padded its accounts with $3 billion in cash.\u00a0<\/p>\n To put this massive haul into context, its net cash only amounted to roughly $1 billion at the end of the first quarter, and the size of its balance sheet totaled just $2.6 billion.<\/p>\n In other words, the company quadrupled its cash pile while more than doubling its assets in the span of just four weeks.<\/p>\n Citron is no longer short $GME<\/a>. It’s not because we believe in a turnaround for the company fundamentals will ever happen, but with $4 billion in the bank, they have enough runway to appease their cult like shareholders. Despite Wedbush setting an $11 target today, we respect the\u2026<\/p>\n \u2014 Citron Research (@CitronResearch) June 12, 2024<\/a><\/p><\/blockquote>\n One of the short-sellers burned by Gill three years ago in 2021 is hedge fund manager Andrew Left.<\/p>\n He confirmed just last week<\/a> he was back to placing bearish bets on the stock, but news that GameStop lined its pockets prompted him to now think twice and watch events unfold from the sidelines.<\/p>\n \u201cCitron is no longer short GME,\u201d his firm wrote. \u201cIt\u2019s not because we believe in a turnaround for the company fundamentals will ever happen, but with $4 billion in the bank, they have enough runway to appease their cult-like shareholders.\u201d<\/p>\n Needless to say, the cash infusion is a massive boon for a company that operates over 4,000 stores worldwide but is experiencing a technological shift.<\/p>\n GameStop specializes in selling physical copies of video games, but more publishers are considering eliminating the format in favor of licensing them as downloads from the cloud. <\/p>\n Sony<\/a> and Microsoft<\/a>, the respective manufacturers of the PlayStation and Xbox, already offer cheaper next-gen consoles that lack optical media drives entirely.<\/p>\n France\u2019s Ubisoft, the games publisher behind the Assassin\u2019s Creed<\/em> and FarCry<\/em> franchises, says people will need to accept that in the future, they won\u2019t own their games, just like they don\u2019t own their movies anymore now that there\u2019s streaming.\u00a0<\/p>\n \u201cGamers are used to\u2014a little bit like DVD\u2014having and owning their games,\u201d Ubisoft exec Phillipe Tremblay told\u00a0GamesIndustry.biz\u00a0earlier this year<\/a>. \u201cThat\u2019s the consumer shift that needs to happen.\u201d<\/p>\n If companies like Ubisoft eventually only sell their wares through the cloud, what purpose will GameStop stores still serve? <\/p>\n Fortunately for Cohen, many hard-core gamers still viscerally oppose this trend.<\/p>\n<\/div>\n\nDoubles the size of the company\u2019s assets<\/h2>\n
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