(Reuters) -GameStop said on Tuesday it had filed for an offering of up to 20 million shares, sending its stock down more than 10% in extended trading after the videogame retailer's second-quarter revenue fell as consumers continued to switch to online buying.
The company, which has been at the center of a "meme stock" trading frenzy, is struggling with declining sales in its primary business of selling new and used video game discs due to a shift to digital downloads, game streaming, and e-commerce shopping.
GameStop (NYSE:GME) said it intends to use the proceeds from the offering "for general corporate purposes, which may include acquisitions and investments in a manner consistent with our investment policy."
The company is also identifying stores for closure and expects to shut down more outlets than it did in the past few years, it said on Tuesday, in-line with comments made by CEO Ryan Cohen in June.
Cohen warned of intense competition in the gaming console market earlier this year.
Analysts at Wedbush said on Friday GameStop continues to face a near insurmountable barrier to its planned return to growth as streaming services proliferate, while the company shows a total lack of any strategy to enter new categories with growth potential.
Shares of GameStop have seen significant volatility this year after online stock influencer Roaring Kitty returned to X.com following a three-year hiatus, with a cryptic meme that was widely seen as a bullish signal for GameStop.
Roaring Kitty was a key player in the 2021 rally in GameStop and other so-called meme stocks that was fueled by individual investors on Reddit's WallStreetBets forum.
GameStop reported revenue of $798.3 million for the quarter ended Aug. 3 compared with $1.16 billion a year earlier. Two analysts polled by LSEG were expecting revenue of $895.7 million.
Its net income stood at $14.8 million, or 4 cents per share, compared with a loss of $2.8 million, or 1 cent per share, a year earlier. This was helped by a 16% fall in the company's selling and administrative expenses in the quarter.