After experiencing a renewed GameStop (NYSE: GME) mania during May and June, the largest benefactor wasn’t Keith Gill, aka ‘Roaring Kitty,’ but GME stock itself.
A surge in meme stock’s price on May 14 and June 6 coincided with Gill’s cryptic posts on X, hinting at his renewed interest in GameStop, later revealing that he holds a substantial portion of GME stock.
The company reacted to the news by issuing 45 million new shares of its common stock on May 17 in an attempt to raise additional cash to address its debt.
So far, it seems that the plan has finally worked, as GameStop announced on August 28 in its 8K form that it is terminating its $250 million debt and that its primary sources of liquidity will be cash from operations and on-hand cash.
GME stock price chart
After starting 2024 with a $16 valuation, the renewed mania sent GME stock flying to almost $50 from May to June. During these periods of significant volatility, the GME holders caused short-sellers to lose almost $2 billion.
However, the recent period has brought stability for this video game retail company. The company closed the latest trading session on August 28 at $19.90 after suffering a 4.05% decline, which extended the losses of 11.56% from the previous five trading days.
Despite these losses, GME shares still trade in the green by 19.38% year-to-date (YTD).
What does being debt-free mean for GME stock
After pushing its Q1 earnings report to June 7, it revealed that it had issued an additional 75 million shares, while the previous issuance of 45 million shares raised $900 million cash, taking its cash pile to $4 billion.
With the recent announcement that it has terminated its $250 million loan, it is safe to assume that GME executives used a portion of this cash pile to refinance the company’s debt.
This, in turn, is expected to have a positive impact on the company, as its investment grade is bound to improve. The company will also not have the burden of debt and interest on the upcoming earnings report, which is set to be released on September 4.
All in all, these will further clarify GameStop’s performance over the previous quarter.
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Source: https://finbold.com/is-gamestop-stock-back-gme-reveals-that-it-is-debt-free/