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GameStop has had issues because more people are downloading video games instead of buying them in stores.
Spencer Platt / Getty Images
GameStop’s stock split is finally taking place.
The company announced plans to split its shares four by one later this month, sending the shares higher after the market closed on Wednesday. Shareholders registered at the close of business on July 18 will receive three additional shares for each share owned through a dividend in shares. Additional shares will be distributed on July 21 and GameStop (ticker: GME) shares will begin trading with a split adjustment on July 22.
GameStop shareholders in June voted in favor of expanding the company’s shareholding to $ 300 billion in order to facilitate a split. The company said in March that the higher authorization would allow it to implement a division and “offer flexibility for future corporate needs.”
GameStop shares rose 5% to $ 123.25 in out-of-hours trading, although stock divisions don’t make a company more valuable, as they are similar to slicing a cake. smaller. If GameStop was split at its recent levels outside of hours, it would be trading at $ 30.81.
That’s around the $ 30 pre-division target price that Wedbush analyst Michael Pachter allocates shares, which he values in Underperform. “It makes it more affordable for unsuspecting rubies who haven’t lost all their money yet,” Pachter told Barron’s by email when asked about the split.
Shares have traded up $ 255.69 in the past 12 months, but have still risen significantly from their 2020 levels. Even the potential post-division number is well above where GameStop shares were trading. before Chewy co-founder Ryan Cohen announced a stake and launched a campaign that kicked off the company’s meme race in January 2021. GameStop shares have fallen 20% in 2022., compared to a drop 19% of the S&P 500 index.
Cohen became chairman of the board of GameStop a year ago. The company has added executives and employees with a background in technology, e-commerce and blockchain to help change things as the company struggles to shift to online video game sales instead of in-store.
Following the reform of the board and management, the company invested in compliance and customer service efforts, as well as expanding its offering to include more computer and television supplies. It is also launching a non-expendable chip market. Experts, like Pachter, are skeptical that these blockchain efforts will benefit the stock.
Write to Connor Smith at connor.smith@barrons.com