GameStop Plans 4-For-1 Split
The meme stock saga continues.
The meme stock saga continues.
GameStop’s stock split is finally happening.
The company announced plans to split its stock 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 every share owned via a stock dividend. The additional shares will be distributed on July 21, and GameStop (ticker: GME) stock will begin trading on a split-adjusted basis on July 22.
GameStop stockholders in June voted in favour of expanding the company’s share authorisation to one billion from 300 million in order to facilitate a split. The company said in March that the higher authorisation would allow it to implement a split and “provide flexibility for future corporate needs.”
Shares of GameStop rose 5% to US$123.25 in after-hours trading even though stock splits don’t make a company more valuable, given that they are akin to cutting a pie into smaller slices. If GameStop split at its recent after-hours levels, it would trade at $30.81.
That is around the US$30 pre-split price target Wedbush analyst Michael Pachter assigns the stock, which he rates at Underperform. “Makes it more affordable for unsuspecting rubes who haven’t yet lost all of their money,” Pachter told Barron’s via email when asked about the split.
The stock has traded as high as $255.69 in the past 12 months, but it is still up significantly from its 2020 levels. Even the potential post-split 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-fueled run in January 2021. GameStop stock has fallen 20% in 2022, compared with a 19% drop for the S&P 500 index.
Cohen became the chairman of GameStop’s board a year ago. The company has added executives and employees with technology, e-commerce, and blockchain backgrounds to help turn things around as the business battles the shift to sales of videogames online rather than in stores.
Following the board and management shake-up, the company invested in fulfilment and customer-care efforts, as well as expanding its offerings to include more computer supplies and TVs. It is also launching a marketplace for nonfungible tokens. Experts, like Pachter, are sceptical such blockchain efforts will benefit the stock.
Reprinted by permission of Barron’s. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: July 7, 2022.
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Mortgage holders are bracing themselves for more pain ahead of this afternoon’s board meeting of the Reserve Bank of Australia.
Westpac, ANZ and NAB are all predicting a rise of 25 basis points to the cash rate. The Commonwealth Bank has also said a rate rise is the most likely outcome, but that there is a small chance that the RBA may decide to leave the cash rate unchanged.
Another rate rise today would make it the eighth consecutive rise since April, when it was at a record low of 0.1 percent. At present, the cash rate is at 2.85 percent.
According to RateCity, a further 0.25 percent increase would add another $75 a month to repayments based on a $500,000 loan.
Inflation has remained stubbornly high at 7.3 percent and rising rates reflect an attempt to drive it down to a more palatable 3 percent into 2023.
Today is the last RBA board meeting for 2022, with the next meeting scheduled for February 2023.
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