GameStop (GME) posted a narrower-than-expected first quarter loss Wednesday, while adding two former Amazon (AMZN) executives to key leadership roles, and unveiled plans to sell another 5 million shares in order to raise further capital.
Shares extended losses in after-hours trading, however, after the retailer said it received a request from the Securities and Exchange Commission on May 26 for a "voluntary production of documents" linked to an ongoing investigation concerning "trading activity".
"We are in the process of reviewing the request and producing the requested documents and intend to cooperate fully with the SEC Staff regarding this matter," GameStop said. "This inquiry is not expected to adversely impact us."
GameStop said its adjusted loss for the three months ending on May 1 came in at 45 cents per share, narrowing from a loss of $1.61 per share last year and topping the Street consensus forecast of 83 cents per share. The reported loss was $1.01 per share. Group revenues, GameStop said, rose 27.5% from last year to $1.3 billion, topping analysts estimates of $1.162 billion.
GameStop also said it would sell up to 5 million shares in an "at-the-market" offering, noting it will use the capital for "general corporate purposes" and investing in "growth initiatives".
Earlier Wednesday, GameStop shareholders elected Chewy.com (CHWY) founder Ryan Cohen as group chairman during the Grapevine, Texas-based retailer's annual meeting. It also named former Amazon executive Matt Furlong as group CEO while other Amazon veteran, Mike Recupero, was named as the new chief financial officer.
GameStop shares, which closed 0.85% higher over the Wednesday session at $302.56 each, fell 9.1% in after-hours trading to indicate a Thursday opening bell price of $275.00 each. That still leaves the stock with an astonishing 1,340% gain for the year.
Data from the Yolosocks.live website, which tracks real-time mentions on stocks within Reddit's r/wallstreetbets chatroom, indicates that GameStop is the most-discussed stock among users, up from a previous rank of 2, over the past 24 hours and more than 6,631 mentions.
Short interest in the shares remains elevated, however, with data from S3 Partners showing just over $3.04 billion in bets against the group, a figure that represents around 10.86 million shares, or 19.06% of the float.