December 10, 2023

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GameStop meme arrow jumps on the stock splitting bandwagon

GameStop meme arrow jumps on the stock splitting bandwagon

Signs are seen at GameStop in Manhattan, New York, US, December 7, 2021. REUTERS/Andrew Kelly

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July 6 (Reuters) – GameStop Corp’s (GME.N) The board has approved a four-for-one stock split that will make it easier for investors to own shares of the video game retailer amid the “meme stock” trading frenzy of the past year.

Shares of the company rose 5.8% to $124.49 in extended trading Wednesday after the announcement.

Several major US companies have chosen to split shares over the past two years, including Apple (AAPL.O)Tesla (TSLA.O) and (AMZN.O).

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A stock split makes shares more accessible to individual investors by lowering the price without affecting the company’s valuation.

GameStop shares are up more than 680% in 2021 thanks to retailers on social media platforms like Reddit who snapped up short-sold shares in an effort to pressure hedge funds that bet against it.

“GameStop management knows they have a 100% retail shareholder base and so they are offering their services to them,” said Michael Pachter, analyst at Wedbush Securities.

“It (the stock split) is also a distraction because the NFT market is dead, and that was the last thing they did trying to get people excited.”

This year, the video game retailer’s shares are down nearly 20% as the Ukraine crisis and fears of a global recession clouded sentiment.

The company said in March that it would seek shareholder approval for a split that would increase its outstanding Class 1 common stock to $1 billion from $300 million.

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Under this split, shareholders will receive a dividend of three additional shares of GameStop’s Class A stock for each share held. Read more

Dividends will be distributed after the markets close on July 21.

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Additional reporting by Shafi Mehta in Bengaluru; Editing by Devika Siamnath

Our criteria: Thomson Reuters Trust Principles.