The stock traded at $283 as of 7:38 a.m. in New York, down 6.5% from the previous closing price of $302.56.

News that the video-game seller may offer another 5 million shares and that past trading activity is being investigated by the Securities and Exchange Commission outweighed the announcement of new leaders from Amazon.com Inc. and quarterly results that beat estimates. GameStop, which became the face of the meme-stock craze earlier this year, is up over 1,500% in 2021.

“The trading probe is definitely a big red flag,” David Trainer, chief executive officer of investment research firm New Constructs, said in an interview. It may be “the needle that can bust the balloon of the stock’s valuation.”

For Wedbush analyst Michael Pachter, the outcome of the probe is unclear and investors may have been more disappointed with the planned share offering and lack of clarity regarding the company’s strategy. The shelf registration “may have had something to do with” the slump in shares following results, Pachter wrote in a note Thursday. Still, he views the potential stock sale as a positive for the company as it would provide more dry powder for acquisitions.

Live Stream

GameStop’s earnings call, which was livestreamed on YouTube and had several thousand viewers, lasted just 11 minutes. Outgoing CEO George Sherman was the only executive who spoke and he declined to take questions from analysts.

“Investors deserve more than memes to value a company’s fundamental, long-term prospects,” Baird analysts Colin Sebastian and Dalton Kern wrote in a note. While clearly laying out the groundwork for digital transformation, the board is not ready to disclose details on some challenges, they said.

Sherman will be replaced on June 21 by Matt Furlong, who led Amazon’s Australian operations. GameStop also hired another Amazon alumnus, Mike Recupero, as chief financial officer. The new recruits are part of Chairman Ryan Cohen’s broader effort to transform the company from a brick-and-mortar chain into an e-commerce success story.

GameStop filed for the potential sale of as many as 5 million shares through an at-the-market offering, which allows retail investors to buy in directly. It previously raised $551 million through an ATM offering in April. The company has otherwise stayed away from selling shares this year, despite calls from analysts to raise equity and a flood of similar deals by fellow meme stocks. The new share sale program announced on Wednesday enables GameStop to raise up to $1.51 billion, based on the last closing price.

The retailer also reported better-than-expected quarterly sales of $1.28 billion and a loss that was narrower than predicted.(Updates share move and adds analyst comments in fifth paragraph.)

–With assistance from Drew Singer and Paul Jarvis.