Karolyn Rabago
Jun 03, 2024 - 04:05

5 Investors Betting Big on GameStop GME Stock in Q1

GameStop stock soared with Roaring Kitty's return, hitting a 52-week high before dropping 65%. Company raises $933.4 million through offering.

GameStop (NYSE:GME) experienced a significant surge in its stock price in May, thanks in part to the return of Roaring Kitty, a key player in the 2021 meme stock rally. The stock reached a new 52-week high of $64.83 earlier in the month but has since dropped to the low $20 range, representing a decline of over 65%.

To capitalize on the heightened stock price, GameStop announced an at-the-market (ATM) offering on May 17. The offering was successfully completed on May 24, with the company issuing and selling 45 million shares for gross proceeds of $933.4 million. These funds will be used for general corporate expenses.

B. Riley Wealth Chief Market Strategist Art Hogan noted that GameStop can benefit from its share surge as long as the price remains elevated and the company continues to have an ATM offering in place. However, Hogan emphasized that GameStop still has a long way to go in terms of aligning its actual value with its stock price.

In its preliminary first-quarter earnings report, GameStop projected a decrease in revenue to between $872 million and $892 million, compared to $1.237 billion in the same period last year. This marks a significant 29% decline from the midpoint of the estimate.

Monitoring institutional ownership is crucial for stocks, as these large investors provide liquidity and support. However, GameStop's stock is not particularly favored among institutional investors. In Q1, 237 13F filers disclosed a stake in the company, a decrease of 20 filers from the previous quarter. The total number of shares held by these filers also decreased by 2.19% to 87.12 million.

Hedge funds, a subset of institutional investors, were even more pessimistic about GameStop. As of Q1, only 37 hedge funds reported a stake in the company, down from 48 in the previous quarter. Total hedge fund exposure decreased by 19% to 8.73 million shares.

Considering these factors, let's delve into the top five shareholders of GameStop.