A Meme-Stock Split

The price of one GameStop share may be going back to $30, but it's not because investors have given up on the meme stock.

The company announced a 4-for-1 stock split Wednesday—something that would have been unheard-of in 2020, when shares were trading for around the price of a Happy Meal. Though GameStop stock is well off its 2021 highs north of $400, it closed at $117.43 on Wednesday. That'd be good for a post-split price of around $30.

The $30 mark is actually Wedbush analyst Michael Pachter's pre-split price target for GameStop stock. He has an Underperform rating. He told me via email:

Makes it more affordable for unsuspecting rubes who haven’t yet lost all of their money.

GameStop shareholders of record at the close of business on July 18 will receive three additional shares for every share owned via a stock dividend. The additional shares will be distributed on July 21, and GameStop stock will begin trading on a split-adjusted basis on July 22.

I write for Barron's:

Even the potential post-split number is well above where GameStop shares were trading before Chewy co-founder Ryan Cohen announced a stake and launched a campaign that kicked off the company’s meme-fueled run in January 2021. GameStop stock has fallen 20% in 2022, compared with a 19% drop for the S&P 500 index.

Cohen became the chairman of GameStop’s board a year ago. The company has added executives and employees with technology, e-commerce, and blockchain backgrounds to help turn things around as the business battles the shift to sales of videogames online rather than in stores.

Wall Street is still skeptical about Cohen and company's efforts. You can read more here.