Shares of GameStop (GME) are in the spotlight on Thursday after the company said it intends to elect Chewy (CHWY) co-founder Ryan Cohen as chairman. The change is expected to take place after the company's annual shareholder meeting scheduled for June 9.

DIRECTOR CANDIDATES FOR 2021 MEETING: GameStop has announced that it is nominating the six individuals to stand for election to its Board of Directors at the Company's Annual Meeting of Stockholders on June 9, 2021, namely Alan Attal, Larry Cheng, Ryan Cohen, Jim Grube, George Sherman, and Yang Xu. The company also said that following the Annual Meeting, the Board intends to elect Cohen as Chairman, all directors will be compensated 100% in equity, and individual director compensation will be reduced approximately 28% from the prior year. Effective immediately, the Board has appointed Grube to serve on the Strategic Planning and Capital Allocation Committee.

PRELIMINARY SALES, SHARE EQUITY OFFERING: On Monday, GameStop reported that preliminary sales quarter-to-date were up about 9% year-over-year. For the first nine weeks of fiscal 2021, total global sales increased approximately 11% from the nine-week period ended April 4, 2020. For the four-week period ended February 27, 2021, total global sales increased approximately 5.3% from the four-week period ended February 29, 2020. For the five-week period ended April 2, 2021, total global sales increased approximately 18% from the five-week period ended April 4, 2020.

Additionally, GameStop announced that it has filed a prospectus supplement with the U.S. SEC under which it may offer and sell up to a maximum of 3.5M shares of its common stock from time to time through an "at-the-market" equity offering program. The company intends to use the net proceeds from any sales of its Common Stock under the ATM Offering to further accelerate its transformation as well as for general corporate purposes and further strengthening its balance sheet.

Telsey Advisory analyst Joseph Feldman kept an Underperform rating and $30 price target on GameStop shares after the company announced that first quarter-to-date sales were up about 11% year-over-year and that it has increased the size of its existing at-the-market program to up to $1B from $100M, but will offer no more than 3.5M shares. The analyst, who said the sales update was "essentially in line" with the FactSet consensus estimate for the whole quarter but above his own first-quarter sales growth estimate, has raised his estimates for the first quarter and for 2021 and 2022 following the news. Feldman also said the company's decision to increase the size of its ATM program is "understandable" given the stock's current valuation, which far exceeds the analyst's "rosy" fundamental expectations and projected multi-year benefits from the strategic transformation.

Bank of America analyst Curtis Nagle also maintained an Underperform rating on GameStop with a $10 price target following the news. More cash is "certainly a positive" for GameStop as it gives the company a higher degree of flexibility and it will add to a current cash position of approximately $600M, Nagle told investors in a research note of his own. However, GameStop is "still a very long way from executing a turnaround," said the analyst. Nagle believes the company's core gaming business is "extremely challenged and losing share at a highly concerning rate." Further, any progress on transitioning the business is "more than priced into shares," added the analyst.

PRICE ACTION: In morning trading, shares of GameStop have dropped about 2% to $174.90 after jumping more than 3% earlier in the session.