(Bloomberg) -- GameStop Corp. shares surged as much as 22% in extended trading after the company said it plans to ask shareholders for approval of a stock split in the form of a dividend.
The gaming retailer will request at its upcoming annual meeting that shareholders approve a proposal to increase the number of Class A shares to 1 billion from 300 million, according to a filing Thursday with the U.S. Securities and Exchange Commission. The stock jumped to a high of $203.98 after closing at $166.58 in New York.
The plan would make the company the latest tech firm to propose a share split after heavyweights Alphabet Inc., Amazon.com Inc. and Tesla Inc. laid out similar goals in recent weeks. The moves helped trigger rallies on the companies as retail investors, who tend to favor stocks with lower price tags, flocked to the shares.
The split is “just a sentiment effect,” Gina Martin Adams, chief equity strategist at Bloomberg Intelligence, said earlier this week referring to the recent split announcements.
GameStop's shares have swung over the past year as the company became a poster child for so-called meme stocks. Retail investors, who organize in online forums like Reddit, boosted the stock by more than 700% in 2021. But gains faded earlier this year until last week when Chairman Ryan Cohen reported an increase in his stake of the company to 11.9%, with the purchase of 100,000 shares, signaling confidence in the gaming retailer.
Cohen joined the board of GameStop early last year and became chairman in June with a vision to revive growth at the Grapevine, Texas-based company, which has slowed as players shifted from buying gaming discs to digital downloads.
The company said on Thursday the split would “provide flexibility for future corporate needs.” It's unclear when GameStop will release its definitive proxy statement. The company hasn't announced when and where it will hold its annual meeting though last year's took place in June.
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