GameStop’s meme stock run makes no sense — and GameStop may turn it into a $3 billion windfall

We can answer some of this now:

GameStop has already made $1 billion by selling 45 million shares of its stock last month, when Keith Gill/Roaring Kitty sparked another meme run.

On Friday, it announced it is going to sell up to 75 million more shares (which is the likely reason the shares are down Friday). Luke Kawa at Sherwood News did some back-of-the-envelope math and estimates that this share sale could raise another $2.5 billion (!) for the company.

In both cases, GameStop says it has no plans for all that cash. It’s just going to hang on to it and … who knows?

Reminder: GameStop is a declining, money-losing company with a grim future. It makes money selling video games, but that business is in a permanent shift from physical goods to digital retail, and in that world, there’s really very little reason for GameStop to exist.

That’s why the company’s shares were massively shorted prior to the January 2021 short squeeze/meme stock mania that sent them soaring to crazy levels, and that’s why they crashed back to earth prior to last month, when Gill/Kitty sparked another meme run.

So this isn’t investment advice. But: Buying shares of GameStop makes as much sense as buying lotto tickets. Maybe you’ll win! But odds are you won’t.

On the other hand, it makes plenty of sense for GameStop managers to turn meme stock investors into cash. It doesn’t mean that cash will turn the company around — AMC, the troubled theater chain that’s also a meme stock, has done the same thing multiple times and remains troubled. And it also feels … off.

But it’s very rational: There’s no reason that the same GameStop shares that were worth $11 in April should sell for $37 Friday. But as long as they are, why not take the money?