(Bloomberg) — GameStop Corp (NYSE:GME). climbed in early trading Wednesday after taking another step to become virtually debt-free amid activist investor Ryan Cohen’s overhaul.
The video-game retailer said it’s redeeming $216.4 million of senior notes, according to a Tuesday statement. The poster child for Redditors looking to squeeze short sellers earlier this year also retired $73.2 million in debt last month. The stock jumped as much as 5.7% premarket on light trading volume.
The early redemption is the latest step in a strategy to turn GameStop into an e-commerce marketplace to compete with Amazon.com Inc (NASDAQ:AMZN)., replacing its current brick-and-mortar focus.
Cohen, who’s set to become GameStop’s next chairman, has replaced key company executives with e-commerce veterans from Amazon and Chewy (NYSE:CHWY), a retailer he previously led. The Grapevine, Texas-based company is also looking to replace current Chief Executive Officer George Sherman, according to a Reuters report.
If Wednesday’s rebound holds, it will snap a seven-day losing streak, the longest since November 2017. The company’s announcement for plans to offer as much as $1 billion in additional shares kickstarted the selloff last week, but could provide extra cash on hand to build out its offerings in the long run.
GameStop’s initial gain stood out from peers that have captivated retail investors as the majority of meme stocks were mixed. While movie-theater operator AMC Entertainment (NYSE:AMC) Holdings Inc. edged higher, cannabis stock Sundial Growers (NASDAQ:SNDL) Inc. and animal-health company Zomedica Corp. dipped.
GameStop has suffered with the video-game industry’s shift to online distribution. With gamers turning their focus to downloads, the need to go to a physical store will tend to diminish, analysts said. The company reported disappointing fourth-quarter earnings last month.
Still, its shares are up more than 600% this year and have a nearly $10 billion valuation.
GameStop Surges as Zero-Debt Plan Boosts Bets on Turnaround
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