An internet meme stock soared as it confirmed a stock split, joining a trend among many North American companies.
In premarket trading on Thursday, GameStop (GME) stock was up 9% and by mid-morning it was up 8%. Over the past six months, the stock has fallen 9%.
GameStop Action (GME)
Tracing its roots to a Dallas, Texas software retailer called Babbage’s in 1984, GameStop sells video games, consumer electronics and accessories.
The GameStop brand also includes international retailer EB Games and digital magazine Game Informer. The company operates retail stores in the United States, Canada, New Zealand, Australia and Europe.
GameStop’s Board of Directors has approved a 4-for-1 stock split in the form of a stock dividend, which will be issued on July 22 to investors holding GameStop stock as of July 18.
The retailer first announced a stock split in March, but didn’t reveal the split ratio until late Wednesday. The company’s previous stock split took place in 2007.
GameStop joins companies such as Shopify (SHOP), Alphabet (GOOG), Google’s parent company, Tesla (TSLA) who recently conducted stock splits, allowing companies to increase their cash and attract new shareholders who may have been put off by the high share price. .
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Last year, GameStop was the subject of intense social media discussion and a commercial frenzy.
GameStop is considered one of the main so-called meme stores with AMC Entertainment (CMA), pushed by retail investors betting against hedge funds that shorted stocks during the Covid-related shutdowns.
Earlier this year, hedge fund Melvin Capital closed and liquidated its accounts after losing nearly $7bn (£5.9bn, €6.9bn) betting against GME, according to media reports. . GameStop still plans to open an NFT market this year, despite a sell-off in the crypto market.
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The company also revamped its management to diversify and return to profitability, appointing two former Amazon.com (AMZN) executives as CEO and CFO respectively.
Video game retailers like GameStop have struggled to make a profit as gamers prefer to download and stream their games rather than buying physical game discs. Store closures due to the pandemic have led the company to bolster its e-commerce offering.
In June, GameStop reported that for its fiscal first quarter ended April 30, loss per share widened to $2.08 from $1.01 a year earlier, as sales rose 8% to $1.38 billion. Analysts had expected a loss of $2.49 per share on sales of $1.32 billion.
Investors will receive a second quarter update from GameStop in September.