GameStop Corp. (NYSE: GME) has been struggling in 2018, and recently rumored this summer that it might be looking for a buyout. It seems that this finally has come to fruition as the company has reportedly hired a firm to explore a possible sale.
According to Bloomberg, GameStop is working with Perella Weinberg Partners to look for a potential buyout.
According to DealReporter, GameStop is now running a formal auction. The private equity firms Sycamore Partners and Apollo Global Management are GameStop’s two main suitors, DealReporter added.
Obviously this announcement revitalized investor hopes that a buyout was possible after a five-year stock slide. The company said in June that it was holding “exploratory discussions” with third parties about a potential deal. But it warned at the time that the talks could lead nowhere, and shareholders have waited for an update.
While shares are up, it seems that a fair amount of this move is a short squeeze. GameStop’s most recent short interest was 39.49 million shares, with 17.9 days to cover.
Excluding Wednesday’s move, GameStop has underperformed the broad markets, with its stock down about 25% in the past 52 weeks. In just 2018 alone, the stock is down closer to 22%.
Shares of GameStop were last seen up about 13% at $15.83, with a consensus analyst price target of $14.55 and a 52-week trading range of $12.20 to $20.97.