Citron Research on Wednesday announced it was no long shorting GameStop stock due to GameStop's amassed cash holdings. The video game retailer late Tuesday announced it secured more than $2 billion in proceeds from its latest equity offering. GME stock tumbled Wednesday after surging in early trade.
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"Citron is no longer short GME," the firm posted on social media Wednesday morning. "It's not because we believe in a turnaround for the company fundamentals will ever happen, but with $5 billion in the bank, they have enough runway to appease their cult-like shareholders."
"Despite Wedbush setting an $11 target today, we respect the market's irrationality. After all, dogecoin remains a $20 billion entity," Citron continued, citing the meme cryptocurrency.
Wedbush early Wednesday lowered its price target on GameStop stock to 11 from 13.50 and maintained an underperform rating on shares, The Fly reported. The firm cited completion of GameStop's second equity offering in the span of a month. Wedbush assumed GameStop would complete the sale at an average price of 40 per share. However, GME stock on June 7 — the day of the offering — closed at 28 per share.
"While the increased share count might temper the mob mentality, Citron will be watching from the sidelines for now," Citron said in its post on X. "BTW … the Kitty livestream was still an insult to the capital markets," the post continued, referencing meme trader Keith Gill's June 7 livestream on GameStop stock. Gill, known as Roaring Kitty online, is a key investor in the meme stock rally and one of the original drivers of GME's spike in 2020 and 2021.
Money In The Bank
Elsewhere late Tuesday, GameStop said it generated $2.137 billion in proceeds after selling 75 million shares as part of an at-the-market equity offering that was announced on June 7. That same day, GameStop missed estimates for Q1 results during an earlier-than-scheduled earnings release. GameStop said it plans to use the proceeds for general corporate purposes, which may include acquisitions and investments.
The offering was GameStop's second equity offering in less than a month. The retailer generated $933.4 million after selling 45 million shares from a previous offering announced May 17.
Separately, GameStop in mid-May also filed a shelf registration statement with the SEC. Shelf registrations allow companies to issue more stock to sell at a future date in one or more rounds.
The filing noted that GameStop's charter allows it to issue up to 1 billion shares of common stock and up to 5 million shares of preferred stock. There were 306.187 million shares of GME common stock outstanding as of May 4.
GameStop said it plans to use the future proceeds from the offering for working capital and general corporate purposes, as well as potentially invest in certificates of deposit (CDs) and U.S. Treasury securities.
GameStop Stock
GameStop stock fell 16.5% Wednesday after surging in the morning. Shares rallied 22.8% on Tuesday.
GME leapt 29.4% so far this month. The meme stock has vaulted 45% in 2024.
You can follow Harrison Miller for more stock news and updates on Twitter@IBD_Harrison
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