GameStop made headlines this week after announcing a 4-for-1 stock split, joining other popular US companies like Apple, Tesla, and Amazon that also recently split their stocks. The news shot GameStop’s stock price up by over 8% in extended trading on Wednesday.
What you need to know about GameStop’s stock split
GameStop's stock split will be in the form of a stock dividend. Investors will receive three additional shares for each GameStop share held at the end of business on July 21st. These will be distributed after the market closes on July 21st and will start trading at their split-adjusted price the following day.
Why is GameStop splitting its stock?
GameStop did not explicitly state the reason for the stock split. But companies typically do this to make their stock more accessible to a larger group of investors and boost the stock’s liquidity.
Before GameStop was at the center of the meme stock frenzy that we saw in 2020 and 2021, the stock traded below $10. Its price skyrocketed over 680% in 2021 as retail investors banded together on platforms like Reddit to attempt a short squeeze, driving up the price. GameStop’s stock price has come down since its height in 2021 and is down by over 20% so far in 2022. However, it is still trading above $100- a big difference from the $10 it was trading at before the meme stock mania.
How does DEGIRO handle stock splits?
If you hold GameStop shares before the end of business on July 21st, you will automatically receive the additional shares following the split on July 22nd. In your account, you’ll see the booking of the additional shares under the ‘transactions’ tab and the total number of shares you have in your portfolio.
Please note that if you sell your shares on or before July 21st, you will sell your shares at the pre-split price and will not be entitled to any additional shares. On the other hand, if you buy shares before or on July 21st and keep them until after the close, you will receive the additional shares on the next trading day.
If you are a DEGIRO client, we will provide more information about this in the coming days before the split.
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The information in this article is not written for advisory purposes, nor does it intend to recommend any investments. Please be aware that facts may have changed since the article was originally written. Investing involves risks. You can lose (a part of) your deposit. We advise you to only invest in financial products that match your knowledge and experience.
Sources: GameStop, Reuters, Bloomberg