The saga is set to take another turn on Friday when shares begin trading after the company’s four-for-one split.
The registered shareholder at the close of business on Monday will receive three additional shares. Investors who bought
Shares between Tuesday and Thursday will receive their additional shares from the seller.
On Friday, GameStop’s stock will trade on a split basis, which means one share will be equal to a quarter of what the stock was worth before the split. GameStop stock closed at $153.47 Thursday, so the price would be $38.37 on a hash rate basis.
A stock split changes nothing fundamentally about a core company because it is akin to slicing the same pie into smaller slices.
However, some investors pile before a stock split because stocks that split tend to outperform the market. This is likely a case of tail wagging the dog, as stocks with strong momentum are more likely to split than slower ones in the market.
GameStop stock is up 3.7% in 2022, though it’s down 14% from where it traded 12 months ago. The
Standard & Poor’s 500
It’s down 16% so far this year, which puts it about 8% below its level at this time in 2021.
Even on a split rate basis, the stock will be much higher than most analysts expected GameStop to trade again in 2020 — and even 2021. The stock was trading at less than $3 early in the pandemic, but jumped in August 2020 when
Co-founder Ryan Cohen has unveiled a stake. He joined the board in January 2021, starting a wave of buying among retail investors and exchanging stock tips on Reddit. This price hike forced investors who bet against the stock to close their positions in an epic squeeze that choked some hedge funds.
GameStop stock closed at $347.51.
Cohen became chairman of the board in June 2021, as the company restructured its C-suite with executives with experience in e-commerce. Under CEO Matt Furlong, the company has been investing heavily in changing itself.
GameStop has struggled for years as consumers shift from physical discs to online games and digital downloads. Now, you’re betting heavily on extended offerings like PC accessories and TVs. It has also launched a market for non-fungible tokens that it hopes will better position GameStop in the next era of gaming, though analysts are skeptical that it can change the company’s fortunes.
Management said this spring that it wanted to split the stock, and in June, shareholders agreed to increase the number of authorized shares to 1 billion from 300 million. GameStop announced details of the split this month.
The company is still popular in some corners of Reddit. Some users think another big boost is on the way. On the flip side, the stock still has more than its fair share of short sellers, who sell borrowed shares to bet a bigger drop.
About 13.5 million pre-retail shares were recently sold short, or 21.6% of the shares available for trading, according to data from short-selling analytics firm S3 Partners. The amount of shorted shares will change after the split, but the dollar amount, $2.15 billion, will remain unchanged, according to Matthew Unterman, principal at S3 Partners.
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