What the GameStop Stock Split Means for Traders

GME's 4-for-1 stock split is scheduled to go into effect on July 21

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GameStop Corp. (NYSE:GME) announced that it would be splitting its stock, with shareholders receiving four shares of the new company for every share they currently own. This move is being made to make the company more attractive to potential buyers. What does this mean for investors? Let's take a closer look.

When Is The GameStop (GME) Stock Split?

The GME stock split is set to occur  on July 21. This means after this date, there will be four times as many shares of GameStop traded on the market.

What Does The GameStop Stock Split Mean For Current Shareholders?

For current shareholders, this means that their ownership stake in the company will be divided into four. So, if someone owned 100 shares of GameStop before the split, they would own 400 shares after the split.

However, the value of each share will be divided by four. So, if each share is worth $100 before the split, it will be worth $25 after the split. The total value of the investment would remain the same. This is because when a company splits its stock, the market adjusts by dividing the price of each share by the number of new shares.

If you are someone that is looking to sell fractions of the equity ownership you have without selling the entire stake, this will be helpful. After the split, you will have more liquidity as there will be more shares to trade. Liquidity means how easy it is to buy or sell an asset and because there will be more total shares, it will be easier to find a buyer or seller for your shares.

Why Is GameStop Doing A Stock Split?

The primary reason that companies split their stock is to make it more attractive to potential investors. When a company's stock price gets too high, it can become unaffordable for many investors. This limits the number of potential investors that the company can attract.

By splitting the stock, the company is essentially making it more affordable for potential investors. This could help GameStop attract a wider range of investors and potentially drive up the price of the stock.

Should I Buy GME Before the Stock Split?

After the stock split, you might realize that you can afford to buy more shares of the company than you could before. If you believe in the long-term prospects of the company, this could be a good time to increase your position.

However, it is important to remember that a stock split is just a technicality and does not necessarily mean that the company's fundamentals have changed. You should still do your own research before making any investment decisions.

Here is a quick investment thesis on the company and potential future outlooks. Please note that this should not be taken as financial advice. This is just a framework of how to decide if you are asking, "Should I buy GME stock split."

GameStop is known as the meme stock of 2020. It all started when hedge funds decided to short the stock, thinking it would go to zero because of the move to digital downloads for games. Retail shops were also going against e-commerce giants which seemed like a losing proposition.

What no one predicted was that a Reddit group called r/WallStreetBets would band together and start buying the stock to drive up the price and force the hedge funds to cover their short positions. This caused the stock to go from about $20 per share to over $400 per share in just a few weeks. The question now is where does it go from here?

The company is still facing the same challenges it was before. The move to digital downloads is still happening and retail is still struggling. However, the company does have a new lease on life.

The Reddit group that drove up the stock price is still active and there are now more people interested in the stock than ever before. The question now is whether or not this interest can be sustained. If retail investors are still interested after this split, the price might be more attractive for them and it could help the price run-up once again.

The story of the stock is a game between Wall Street elites and the retail mainstream. If the company can capitalize on investors' interests and reinvent its business model, it might be able to come out on top. However, it is still a risky bet.

One way they can bring value to their company would be to focus on their e-commerce site and bring in more digital sales. NFTs are also making a big splash in the gaming market and GameStop could focus on that as well. But the proposition of it becoming an outdated retail store is still very real.

The bottom line is that the GameStop stock story is far from over. The stock split might attract more investors but only time will tell what will happen.

Should I Buy GME After the Stock Split?

Those that have not been able to afford the stock might be able to get in on the new lowered price. This fan-favorite might see an inflow of new investors. If you are looking for a short-term trade and can afford the price it's trading at before the split, you might want to buy now and hope for a quick bump when the split happens.

However, as always, do your own research before making any investment decisions. Others might be looking to dump their shares immediately or shortly after the stock split. This company's shares have been known to be volatile and manipulated so it's difficult to predict how this trade will play out.

Everything You Need to Know About the GameStop (GME) Stock Split

As a review, the GameStop (GME) stock split is set to happen on July 21. This means that after this date, there will be four times as many shares of GameStop traded on the market. What does this mean for investors?

Well, the total value won't change but the number of shares will quadruple. The price per share will be divided by four. There might be more investor interest but this does not change the underlying value of the company. You should continue to do your own research before making any decisions. 

 

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