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Shares of the company shot up 5.8% to $124.49 in extended
trading on Wednesday after the announcement.
Several major U.S. companies have opted for stock splits over
the past two years, including Apple, Tesla and Amazon.com.
A stock split makes shares more affordable for individual
investors by lowering the price without affecting the company's
valuation.
Shares of GameStop skyrocketed more than 680% in 2021 thanks to
retail traders on social media platforms such as Reddit who
snapped up heavily shorted stocks in a bid to squeeze out hedge
funds betting against them.
"GameStop management knows that they have a 100% retail
shareholder base and so, they are catering to them," said
Wedbush Securities analyst Michael Pachter.
"It (the stock split) is also a distraction because the NFT
market is dead, and that was the last thing that they did that
tried to get people excited."
This year, the video-game retailer's shares have wound down
roughly 20% as the Ukraine crisis and fears of a global
recession clouded sentiment.
The company said in March it would seek shareholder approval for
the split which would increase its outstanding Class A common
shares to 1 billion from 300 million.
Under the split, shareholders will receive a stock dividend of
three additional shares of GameStop's Class A common stock for
each share held.
The dividend will be distributed after markets close on July 21.
(Reporting by Chavi Mehta in Bengaluru; Editing by Devika
Syamnath)
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