A raucous two-week stretch for GameStop Corp. has more than tripled its share price, but the company itself hasn’t taken advantage of the surge by selling stock — and the explanations about why are wide-ranging.

Unlike AMC Entertainment Holdings Inc., a fellow meme stock darling that did cash in as shares spiked, GameStop apparently didn’t have a so-called at-the-market filing in place ahead of the rally which would allow it to sell new shares with no additional paperwork. The retailer also is expected to release quarterly earnings soon, and may have decided it wouldn’t or couldn’t speed up the disclosures the U.S. Securities and Exchange Commission would likely require to sell new stock.

For companies to set up and sell shares in an ATM offering they “would need to disclose any material information,” which would include earnings in some capacity, said Jay Ritter, professor of finance at the University of Florida. “If the ATM was already ongoing, since it is up to a broker-dealer to execute the trades rather than the company, there is less disclosure required than if the company tells a broker-dealer to start issuing.”

Even if the regulatory lane was clear, a move for GameStop to sell new shares for the first time since 2021 when it raised more than US$1 billion could irk loyal traders who have touted its clean balance sheet, with essentially zero debt and nearly $1 billion in cash, as a reason why the company was a bargain as recently as a week ago.

AMC, by contrast, is negotiating with its creditors to extend obligations. Bloomberg Intelligence analysts Kevin Near and Geetha Ranganathan highlighted prior to the company’s debt for equity swap that AMC had $624 million in cash at the end of the first quarter ahead of its $250 million raise, along with roughly $4.5 billion in debt, including a $2.8 billion 2026 maturity wall.

The bullish case for GameStop investors is currently “all on the momo meme trade, which perhaps still has legs,” said investment research firm Hedgeye’s Jeremy McLean, who warned that a “near best case scenario is already priced in in terms of fundamentals.”

GameStop and Ryan Cohen, its chief executive officer and largest shareholder, face a difficult turnaround on the horizon as gamers have largely switched to downloading new titles rather than shopping at brick-and-mortar stores. 

Speculative Rebound

While GameStop stock remains down nearly 70 per cent from a 2021 peak, a 226 per cent surge to start May has positioned it to capitalize on a rebound across speculative corners of the market.

Still, the moment for inundating the market with new shares can be fleeting. As of 2:15 p.m. on Wednesday, the stock had peeled back 44 per cent from a Tuesday intraday high of $64.83. 

AMC was well-positioned for a rally. The movie-theater chain’s at-the-market deal was lined up in March, enabling it to sell $250 million worth of shares through Monday’s surge. It then announced a debt-for-equity swap that further diluted investors while helping address its billions in debt. 

B. Riley Securities analyst Eric Wold highlighted that AMC has about 191 million shares authorized that have not yet been issued.

It’s unclear precisely when GameStop would be able to sell shares, if it chooses to. The company has historically released first-quarter results in the first half of June before an annual meeting of investors and has not formally set an earnings date. A GameStop representative didn’t immediately respond to a request for comment.

A key part of GameStop’s attraction has been the aura surrounding Cohen as a champion of the meme crowd, and the company’s strategy now includes Cohen using its cash to invest in equities. 

GameStop selling its own stock may signal to meme investors that the company is admitting it’d be timely to cash in, according to Wedbush’s Michael Pachter, one of the company’s most vocal skeptics. 

“If they issue shares, they think the price is pretty compelling,” he said.