Shares of GameStop Corp. jumped on Thursday’s extended trading after the company announced plans to implement a stock split.
The world’s largest video game retailer skyrocketed 16.82%, or 28.02 points, to $194.60 per share.
It reversed its loss of 0.16% or 0.27 points to $166.58 per share during the regular-hours market. The upturn also sent an additional $2.14 billion to the company’s valuation.
The Texas-based firm mentioned that it would seek approval at its next shareholder meeting to increase the number of Class A common stock.
The plan is to expand the share from 300,000,000 to 1,000,000,000. This move would partly conduct a stock split in the form of a dividend.
However, it was unclear how much the increased share count would be for the stock split.
Eventually, GameStop inserted a line in a regulatory filing, suggesting that part of the hike could probably sell more stock.
The business also emphasized that the authorization could provide flexibility for future corporate needs. It said that the stock dividend would be contingent on final board approval.
Shares of GameStop have been on a tear this month, trading 39.96% or 47.56 points higher. This positive movement came as enthusiastic retail investors stood by their meme favorite.
In addition, the stock got a boost earlier this month when chairman Ryan Cohen bought an additional 100,000 shares. This brought the activist investor’s ownership to 11.90%.
Still, market participants looked forward to a fundamental turnaround at GameStop. Some are quite disappointed as the firm revealed few details about its e-commerce transformation.
Nevertheless, its stock price edged up 8.99% or 13.74 points since the start of the year.
GameStop follows Tesla, Amazon, Alphabet
The announcement of GameStop came amid a series of stock splits in the technology sector.
On Monday, leading EV maker Tesla stated that it would seek investor approval to enable a future stock split. This plan pushed the firm’s market capitalization to about $80.00 billion.
Recently, e-commerce giant Amazon and Google-parent Alphabet have also reported upcoming share splits.
Accordingly, the hopes of resolving the Russia-Ukraine crisis have driven the stock market recovery this month.
At the same time, this has boosted the investors’ risk appetite, making conditions for meme-stock rallies more favorable.
However, analysts warned that GameStop’s cash balance might erode relatively quickly unless the company becomes profitable soon.
Earlier this month, the retailer reported a net loss of $147.50 million for January’s three months. The figure is the first holiday-season loss in its history.