A GameStop store is pictured in the borough of Manhattan in New York City, New York, the United States, on January 29, 2021. REUTERS/Carlo Allegri/File Photo
March 31 – Video game retailer GameStop Corp (GME.N) said on Thursday it would seek shareholder approval for a stock split, aiming to become the latest US company to make it easier for retail investors to sell its shares to own.
The move comes after retail investor interest in so-called “meme stocks” surged over the past two weeks, prompting GameStop’s share price to double to $166.58. A stock split makes stocks more affordable to retail investors by lowering the price without affecting the company’s valuation.
Some investors are betting that the stock split will boost GameStop’s value by attracting more meme stock enthusiasts. Shares of the company rose 19% in after-hours trading on Thursday after the company announced the move.
Over the past two years, Apple (AAPL.O), Nvidia (NVDA.O) and Tesla (TSLA.O) have split their shares, while Amazon (AMZN.O) and Google parent Alphabet (GOOGL.O) recently split their stakes announced stock splits.
On Monday, Tesla Inc. (TSLA.O)’s market cap rose by more than $80 billion after the electric carmaker said it would seek investor approval to increase the number of its shares again to accommodate a future stock split , without saying when that split would happen might happen. Continue reading
This month’s stock market rebound, fueled by hopes of a resolution to the Russia-Ukraine conflict, has heightened investor risk appetite and made conditions more favorable for meme stock rallies.
Meme stocks are heavily discounted stocks that are being bought up by retail investors on social media platforms like Reddit with the aim of tying down hedge funds that are betting against them. The trend took Wall Street by storm in January 2021 and slowly fizzled out over the course of the year.
GameStop plans to increase the number of Class A common shares outstanding to 1 billion from 300 million, a filing said. The company will also ask shareholders to vote on an incentive plan “to support future compensatory share offerings,” it added. (https://bit.ly/36Ztlqy)
The date and location of the company’s annual general meeting has not yet been announced.
Billionaire Ryan Cohen, CEO of GameStop, announced earlier this month that his investment company bought 100,000 shares of the games retailer. The purchase increased Cohen’s total ownership of GameStop to 11.9%. Continue reading
Cohen’s efforts to transform GameStop after he joined the company last year by investing in its stores and e-commerce business and bringing in new talent hasn’t yielded big results yet.
The company earlier this month reported a net loss of $147.5 million for the three months ended January, its first Christmas loss in its history. The retailer has been trying to win back players who are now turning to online streaming or other outlets.
GameStop’s cash balance could erode “relatively quickly” if the company doesn’t become profitable soon, analysts at Wedbush warned earlier this month.
Reporting by Yuvraj Malik and Shariq Khan in Bengaluru, Svea Herbst-Bayliss in Boston and Noel Randewich in San Francisco; Edited by Greg Roumeliotis and Kenneth Maxwell