Shareholders of video game retailer GameStop (NYSE:GME) will vote on whether it should split its stock at the company’s annual meeting on June 2. Market observers see this event as a potential catalyst for GME stock.
GME stock has gained 36% over the past five trading days, largely in anticipation of the vote on June 2. In March, GameStop’s share price jumped 17% higher when it was first reported that the management team plans to split the stock on an apparent 3-for-1 basis, increasing the number of Class A common stock to 1 billion shares from 300 million shares previously.
What Happened With GME Stock
GameStop officially announced plans for a stock split on March 31 of this year. That the stock split vote will officially happen on June 2 has investors excited, and many are buying GME shares ahead of time.
GameStop continues to see its share price fluctuate wildly.
This year, GME stock has been as high as $190 and as low as $78. Many analysts have speculated in recent months that the stock split could prove to be a major catalyst for GameStop shares and send the price sharply higher.
Why It Matters
With the meme stock craze cooling, GameStop’s share price has fallen steeply from its 52-week high of $344.66. The company continues to focus on moving away from its original brick-and-mortar retail network and toward an e-commerce business model. But the move to a more digitally oriented company has yet to gain a lot of traction.
The proposed 3-for-1 stock split would take GME stock’s price down to $42.82 a share based on yesterday’s closing price. The lower price could prompt another rush into the stock, leading to another potential run up in the share price.
While the stock split and lower price don’t change the fundamentals of GameStop as a business, it will make the company’s shares more affordable for retail investors. GameStop’s board of directors and management team are strongly encouraging shareholders to vote in favor of the stock splits approval.
What’s Next for GameStop
GME stock gets a nice pop higher today on news that the date for the stock split vote has been set for June 2. Investors should keep an eye on the share price over the next week, leading into the vote to see if it keeps running higher. The stock may also jump significantly once the results of the stock split vote become known. As always, there continues to be a lot of drama swirling around GameStop and its shareholders.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.