[GameSpot] - GameStop Announces Plans For First Stock Split In 15 Years

[343iBot]

GameStop's stock price jumped significantly on Thursday after the retailer announced it was looking into a rare stock split, but the share price has since fallen back down. On Thursday, GameStop announced in a regulatory filing that it would seek shareholder approval for a stock split, which would be the first at the company in 15 years. Management is asking shareholders to approve an increase of shares from 300 million to 1 billion. This is being done to launch a stock split of common stock to help "provide flexibility for future corporate needs."

GameStop shares surged 17% on Thursday in the wake of the news but have since fallen back down to pre-announcement levels. MarketWatch reports that the last time GameStop did a stock split--on March 19, 2007--GameStop split its shares 2-for-1. However, the company didn't disclose the ratio of its upcoming split, should it be approved. More details will come later this year in a proxy filing.

GameStop wouldn't be alone in launching a stock split this year, as Alphabet, Amazon, and Tesla are all planning to do so in the coming months.

As GameSpot sister site CNET reminds us, a stock split breaks existing shares down into smaller pieces. As a result, the total share count goes up and the price per share goes down.

"For example, imagine you take a fresh homemade pizza out of the oven. It's uncut and will be difficult to eat. To make it easier on yourself--and to enable sharing--you use a pizza cutter to slice the pie into eight pieces. There is still the same amount of pizza available, it just offers more flexibility and access now," CNET reported.

GameStop lost $381 million last year and is now looking to crypto and NFTs for success in the future.

In other recent news, Reggie Fils-Aime, the former Nintendo of America president who served on GameStop's board of directors for a period of time, has criticized GameStop management for not allowing him to attend planning sessions to map out GameStop's future.

"The issue was that as the strategy was beginning to be developed, I asked to be part of the team to develop the strategy. I knew the business. I knew it as a consumer, I knew it as a vendor; I had pretty strong opinions on how the business needed to be pivoted. But I was rebuffed," Fils-Aime said. "The perspective was, 'Reggie, we want to keep the team small... so it's going to be myself [Cohen] and a few of the people I brought on board.'"

Fils-Aime flat-out said billionaire GameStop investor Ryan Cohen and the team around him "don't know this business; don't understand the players."

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