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GameStop Woos Investors with Four-for-One Stock Split
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GameStop Woos Investors with Four-for-One Stock Split

Story Highlights

Will GameStop be able to recoup its lost sheen by wooing investors with a stock split?

GameStop Corp. (NYSE:GME) gained 8.9% during the extended trading session yesterday after its Board of Directors approved a four-for-one stock split of its Class A common stock in the form of a stock dividend. Shares of the American video game retailer have lost 23.2% so far this year.

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The stock dividend will be paid on July 21, 2022, to shareholders on record as of July 18, 2022. Each eligible shareholder will receive a dividend in the form of three additional shares for every share held by them. Notably, GME stock will start trading on a split-adjusted basis on July 22, 2022.

GameStop had won investors’ favor as a top stock during 2021’s meme stock frenzy. The stock surged over 700% in 2021 but lost its sheen in 2022. The stock split is a way to attract investors and make it more affordable for the average Joe.

Sell Rating for GME

According to Reuters, Wedbush analyst, Michael Pachter, said, “GameStop management knows that they have a 100% retail shareholder base and so, they are catering to them… It (the stock split) is also a distraction because the NFT market is dead, and that was the last thing that they did that tried to get people excited.”

Pachter has a Sell rating on GME stock with a price target of $30, which implies an astounding 74.5% downside potential to current levels.

With one Hold and one Sell, GME stock has a Moderate Sell consensus rating. The average GameStop price target of $70 implies 40.4% downside potential to current levels.

Investors & Hedge Funds Remain Neutral about GME

Notably, TipRanks’ Stock Investors tool shows that investor sentiment is currently Neutral on GameStop, with 0.3% of portfolios tracked by TipRanks increasing their exposure to GME stock over the past 30 days.

Similarly, TipRanks’ Hedge Fund Trading Activity tool shows that confidence in GameStop is currently Neutral, as two hedge funds increased their cumulative holdings of GME stock by 58,800 shares in the last quarter.

Conclusion

GameStop is taking steps to attract its lost fandom in the market. However, investors still maintain a neutral stance on the stock. The company needs to prove its mettle by consistently performing financially to woo investors.

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