GameStop Plans 4-for-1 Stock Split. Its Shares Are Soaring.

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GameStop’s

stock split is finally happening—and its shares are soaring on the news.

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 favor of expanding the company’s share authorization to one billion from 300 million in order to facilitate a split. The company said in March that the higher authorization would allow it to implement a split and “provide flexibility for future corporate needs.”

Shares of GameStop have risen 9% to $128 in premarket 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 $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

(CHWY) 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 fulfillment 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 skeptical such blockchain efforts will benefit the stock.

Write to Connor Smith at [email protected]