Gamestop’s stock is jumping on news that the retailer’s planning a three-for-one stock split.
GME is looking for shareholder approval for this change, which would increase its number of outstanding shares from 300 million to around 1 billion.
New investment includes a purchase of 100,000 Gamestop shares by the chairman of the Gamestop board, who runs his own investment company.
“Billionaire Ryan Cohen, who is the chairman of GameStop’s board, disclosed earlier this month that his investment company purchased 100,000 shares of the game retailer,” a Reuters team reports. “The purchase took Cohen’s total ownership of GameStop to 11.9%. Cohen’s effort to turn GameStop around after he joined the company last year by investing in its stores and e-commerce business and bringing in new talent have yet to produce major results.”
The group also notes less than inspiring revenues and activity lately, writing:
“The company earlier this month reported a net loss of $147.5 million for the three months ending January, the first holiday-season loss in its history.”
Anders Bylund at Motley Fool reports that the company may also use new shares for executive compensation.
Bylund also mentions the meme stock phenomenon where Gamestop trading spiked last year.
“(GME) stock surged to historic highs thanks to the ‘meme stock’ phenomenon, in which a large number of small investors organized market-moving trades via social media channels,” Bylund writes. “GameStop is now searching for a long-term strategy, but its management team and board of directors have been tight-lipped about the details of this strategy shift.”
Analyzing the current stock split, Bylund suggests that if the market sentiment propelling higher Gamestop prices reverses itself, the company would need to either reverse the stock split or possibly fall below the one dollar mark for NYSE trading.
Keep an eye on this activity as the revered meme stock does tricks.
