GameStop's stock price jumped significantly on Thursday after the retailer announced it was looking into a rare stock split, but the share price has since fallen back down. On Thursday, GameStop announced in a regulatory filing that it would seek shareholder approval for a stock split, which would be the first at the company in 15 years. Management is asking shareholders to approve an increase of shares from 300 million to 1 billion. This is being done to launch a stock split of common stock to help «provide flexibility for future corporate needs.»
GameStop shares surged 17% on Thursday in the wake of the news but have since fallen back down to pre-announcement levels. MarketWatch reports that the last time GameStop did a stock split--on March 19, 2007--GameStop split its shares 2-for-1. However, the company didn't disclose the ratio of its upcoming split, should it be approved. More details will come later this year in a proxy filing.
GameStop wouldn't be alone in launching a stock split this year, as Alphabet, Amazon, and Tesla are all planning to do so in the coming months.
As GameSpot sister site CNET reminds us, a stock split breaks existing shares down into smaller pieces. As a result, the total share count goes up and the price per share goes down.
«For example, imagine you take a fresh homemade pizza out of the oven. It's uncut and will be difficult to eat. To make it easier on yourself--and to enable sharing--you use a pizza cutter to slice the pie into eight pieces. There is still the same amount of pizza available, it just offers more flexibility and access now,» CNET reported.
GameStop lost $381 million last year and is now looking to crypto and NFTs for success in the future.
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