GameStop’s Proposed Stock-Split Lifts “Meme” Stocks
Stock Splits in Vogue
It seems like stock splits are all the rage. Just this year, companies such as Alphabet (GOOGL), Amazon (AMZN), and Tesla (TSLA) announced share-split plans. The proposals are subject to shareholder approval and have not yet taken effect. Now GameStop (GME) has made a similar pitch to shareholders.
Companies may want to increase the number of their shares outstanding for various reasons, including making the price per share more affordable, paying a stock dividend, and increasing financial flexibility. Stock splits increase the number of shares with a proportionate decrease in the share price. The market capitalization of the company remains unchanged.
Rise of the Memes
Historically, so-called “meme stocks” such as GameStop, AMC Entertainment Holdings (AMC), and Hycroft Mining Holding Corp (HYMC) have seen rallies, spurred by their online fanbase. Gamestop achieved notoriety in 2021 when retail investors congregating in forums on sites like Reddit triggered the stock’s 700% increase.
The news of GameStop’s stock-split proposal triggered a spike in its share price. Other meme stocks got a boost as well. Shares of AMC and Hycroft were up 5% on the news.
GameStop Share Multiplier
GameStop is requesting approval to increase outstanding shares of common stock from the current 300 million to 1 billion. A date for the shareholder meeting has not yet been set.
The plans for the additional shares are vague. Company officials indicate an interest in securing flexibility to support future corporate needs, so not all of the additional shares would necessarily be tagged for the stock split. It seems a stock dividend is among the possibilities. In the meantime, GameStop and the other meme stocks are back in the headlines.
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