(Reuters) -Video game retailer GameStop Corp said on Thursday it will seek shareholder approval to increase its number of shares and enable a stock split in the form of a dividend and “to provide flexibility for future corporate needs”.
One of the biggest beneficiaries of a “meme-stock” retail-trading frenzy that ensued after pandemic-related lockdowns began to disrupt global economies, GameStop’s shares have rocketed from around $3 in March 2020 to over $165 at Thursday’s close.
The company’s shares jumped 19% to $198.50 in after-hours trading on Thursday.
On Monday, Tesla Inc’s market capitalization jumped by over $80 billion after the electric-car maker said it would seek investor approval to increase its number of shares to enable a future stock split, without saying when that split might occur.
Alphabet Inc, Amazon.com Inc and Apple Inc are among other large tech companies that have split their shares in the recent past.
Companies split their shares to make their stock prices appear less expensive and appeal to more investors. However, splitting a stock does not affect its underlying fundamentals.
GameStop plans to increase its number of outstanding Class A common shares to 1 billion from 300 million, it said in a filing. The company will also ask shareholders to vote on a incentive plan “to support future compensatory equity issuances”, it added. (https://bit.ly/36Ztlqy)
The date and location of the company’s annual shareholders meeting have not yet been announced.
Billionaire Ryan Cohen, who is the chairman of GameStop’s board, earlier this week disclosed that his investment company purchased 100,000 shares of the game retailer. The purchase took Cohen’s total ownership of GameStop to 11.9%.
(Reporting by Yuvraj Malik and Shariq Khan in Bengaluru; Editing by Shounak Dasgupta)
