GameStop (NYSE:GME) has decided to implement a long-awaited 4-for-1 split of GME stock. It was initially approved by its shareholders on June 2. The change, which is being undertaken to make the shares more attractive to retail investors, is slated to occur on July 22.
The video game retailer’s board has formally voted to carry out the split, leading to a rally by the shares. So far this morning, the stock has jumped by more than 9% to about $128.
Investors who own GME stock as of the end of the trading day on July 18 will receive three additional shares for every share they own. The new shares will technically be distributed through a dividend on July 21, but they will not start trading until July 22.
Commentators Are Pessimistic About GME Stock
One analyst, Wedbush’s Michael Pachter, is very bearish on GME stock and cynical about its upcoming split. In an e-mail to Barron’s, he wrote that the change “makes it more affordable for unsuspecting rubes who haven’t yet lost all of their money” on the shares. The analyst has an “underperform” rating on the name.
In a July 2 column, InvestorPlace contributor Thomas Niel predicted that GME stock could sink soon after the long-planned split occurs. “With more fair-weather buyers only sticking around for a post-split boost, shares could fall back once this event happens,” he wrote, adding that “staying away [from GME stock] is your best move.”
Finally, on July 1, InvestorPlace contributor Joseph Nograles contended that since video game sales are back down to pre-pandemic levels, “for investors, there is little incentive to buy GME stock.”
On the date of publication, Larry Ramer did not hold (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.