Shares of GameStop Corp. (GME) rose as much as 22% on Tuesday after the video game retailer said it had raised about $1 billion in its latest stock offering.
GameStop shares opened trading at around $23, well below the nearly $65 levels they reached during a brief meme rally earlier this month.
Still, one strategist said Tuesday's stock market moves reflected investor enthusiasm for meme stocks — stocks that have been soaring in value because of online buzz that they are out of touch with fundamentals.
“If this were a normal market, people would be panicking a little bit,” Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance.
He added: “If you think your stocks are undervalued, don't sell them in the market. The time to sell is when you think your stocks are overvalued.”
GameStop is a heavily shorted stock, with short interest exceeding 21% of shares outstanding.
The company capitalized on an unexpected meme rally in mid-May, selling 45 million shares to raise about $933 million, according to a statement on Friday.
GameStop said it plans to use the net proceeds for general corporate purposes, including acquisitions and investments.
The IPO was first announced on May 17th, alongside the company's preliminary financial statements, causing its stock price to fall 30% that day.
Some Wall Street analysts see the IPO as a smart move given the video-game retailer's deteriorating financial situation. GameStop's most recent earnings report showed quarterly sales were down sharply from the same period a year ago.
GameStop's stock sale comes at the same time as fellow meme stock AMC Entertainment (AMC), which also capitalized on the meme craze by selling 72.5 million shares earlier this month, raising $250 million.
AMC shares rose more than 2% on Tuesday.
GameStop saw its stock price soar for two days starting May 13th. online Reappearance Founder of “Roaring Kitty,” who is seen as the catalyst for 2021's meme stock boom.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on X. Follow.
