GameStop surge after declaring 4-for-1 stock-split

Shares of GameStop notched an upturn on Thursday’s pre-market trading after announcing the approval of its 4-for-1 stock split. The video-game retailer shot up 8.91% or 10.46 points to $127.89 per share. This movement completely reversed a downturn of 2.33% or 2.80 points to $117.43 apiece during regular hours.

Accordingly, shareholders will receive a stock dividend of three additional shares of GameStop’s Class A common stock for each share held. Then, the plan will occur after markets close on July 21 and start trading on a split-adjusted basis the following day.

A stock split makes the firm’s shares affordable to more investors without losing value. Subsequently, the move would raise the stock’s volatility as the number of shares increased, a comfortable option for market participants.

Subsequently, the announcement did not come as a complete surprise. In April, the retailer disclosed in an SEC filing that it planned to implement a stock split.

GameStop has posted volatile one-day moves since gaining online attention last year. It skyrocketed more than 680.00% in 2021 as a group of retail investors coordinated a short squeeze.

Since then, the strength of the company has faded. Eventually, the meme stock has wound down from its highs by 23.17% year to date. This downturn came amid the clouded sentiment due to the Ukraine crisis and fears of a global recession.

GameStop’s Short-Squeeze Potential

Investors now discern whether GameStop could pin another short-squeeze potential. Previously, its upsurge benefitted from the frenzy on online sites like Reddit.

Analysts cited that the stock’s recent borrow fees went through the roof, reaching all-time highs above 108.00%. This report reflected a rally of 65.00% between May and June, indicating a higher chance of a short squeeze.

Moreover, the current setup is bullish for GameStop, but the trend is less intense than in June. Market participants now look forward to the launch of the company’s NFT marketplace this month, marking a possible uptrend.

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