Originally Published: 27 APR 21 09:08 ET

Updated: 27 APR 21 11:16 ET

By Paul R. La Monica, CNN Business

(CNN) -- GameStop shares have gone ballistic this year, surging more than 800% thanks to love from Reddit fans betting on a turnaround for the video game retailer. Now, GameStop has cashed in with a sale of more than $550 million in stock.

Shares of GameStop soared about 7% Tuesday on the news of the stock sale.

GameStop announced earlier this month that it planned to sell as much as 3.5 million shares. The company said Tuesday that it will use the proceeds from the offering to continue investing in its transformation into a more online-focused retailer, and to strengthen its balance sheet.

The company's stock has been on a tear, even though several hedge funds and other short sellers have been betting against it.

That's thanks to the new strategy put into place by Ryan Cohen, the co-founder of online pet supplies retailer Chewy, whose investment firm bought a big stake in GameStop last year. And GameStop also became the quintessential "meme stock," as an army of individual investors on Reddit and other social media platforms enthusiastically defended the company against critiques by short sellers.

Cohen is set to become GameStop chairman after its annual shareholder meeting in June.

GameStop CEO George Sherman is also planning to step down later this year, a move that further illustrates Cohen's growing control over the company. In the past few months, GameStop has hired several former Chewy executives as well as some from Amazon.

Despite the enthusiasm about the future, GameStop still faces many current challenges as brick-and-mortar retailers slowly start to reopen following the worst of the Covid-19 pandemic last year.

GameStop posted mixed results during the holidays. Earnings for the fourth quarter missed Wall Street's forecasts and overall revenue fell from a year prior.

But e-commerce sales were up a staggering 175% from a year ago and now account for more than a third of GameStop's total revenue.