The video game retailer and perennial meme stock GameStop will split its stock, pending approval by shareholders, according to a new regulatory filing on March 31. The company will increase its total number of shares from 300 million to 1 billion.
GameStop’s stock price rose more than 15% in after-hours trading on the news.
Although stock splits do not change the financial value of a shareholder’s ownership stake, they multiply each investor’s total number of shares and divide the price per share. In recent weeks, Amazon and Google have announced 20-for-1 stock splits, which would drastically lower their respective share prices from thousands of dollars per share to mere hundreds of dollars per share. Tesla also announced a planned stock split this week but has yet to divulge the specifics of the maneuver.
GameStop’s stock costs about $190 per share considering the after-hours movement but has swung wildly from $15 per share to a high of $325 since it was the subject of a well-publicized short squeeze in January 2021. The split, if executed today, would price GameStop stock at about $57 per share.
What is a stock split?
Stock splits are mostly a marketing ploy, designed to reconfigure stock prices to appeal to retail investors. Would you prefer to buy one share of a $1,000 stock or 10 shares of a $100 stock? Something about the 10 shares feels better to most investors.
And data show that stock purchasing surges in the days after stock split announcements, as was the case with Tesla, Amazon, Apple, and Google’s most recent announcements, according to the financial firm Vanda Research.
While big tech giants like Amazon want to cash in on the retail investing boom, GameStop is trying to renew the Reddit-based retail interest that made it the quintessential meme stock in the first place.