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GameStop has struggled because more and more people are downloading video games rather than buying them from stores.
Spencer Platt/Getty Images
GameStop’s
the stock split finally happens – and its shares are skyrocketing on the news.
The company announced plans to split its shares four-for-one later this month, sending shares higher after the market closed on Wednesday. Shareholders of record at the close of business on July 18 will receive three additional shares for each share held via a stock dividend. The additional shares will be distributed on July 21, and
GameStop
(ticker: GME) shares will begin trading on an allocation-adjusted basis on July 22.
GameStop shareholders voted in June to expand the company’s stock authorization to $300 million to facilitate a spin-off. The company said in March that the higher clearance would allow it to implement a spin-off and “provide flexibility for future business needs.”
GameStop shares rose 9% to $128 in premarket trading, even though stock splits don’t make a company more valuable, given they’re akin to cutting a cake into smaller slices . If GameStop separated at its recent after-hours levels, it would be trading at $30.81.
That’s around the $30 pre-split price target that Wedbush analyst Michael Pachter attributes to the stock, which he rates at Underperform. “Makes it more affordable for unsuspecting rubies who haven’t lost all their money yet,” Pachter said. Barrons via email when asked about the split.
The stock has traded as high as $255.69 in the past 12 months, but is still significantly up from its 2020 levels. Even the potential post-split number is well above where the GameStop shares were previously trading
Soft
(CHWY) co-founder Ryan Cohen announced a stake and launched a campaign that launched the company’s meme-fueled race in January 2021. GameStop stock fell 20% in 2022, compared to a decrease of 19% for the
S&P500
index.
Cohen became chairman of GameStop’s board of directors a year ago. The company has added executives and employees with knowledge of technology, e-commerce and blockchain to help turn things around as the company struggles with the shift to selling video games online rather than in-store.
Following the board and management reshuffle, the company invested in execution and customer service efforts, as well as expanding its offerings to include more computer supplies and televisions. It also launches a market for non-fungible tokens. Experts, like Pachter, are skeptical that such blockchain efforts will benefit the stock.
Write to Connor Smith at connor.smith@barrons.com
