GameStop on Premarket grows by 10% on news of the stock split

Shares of the retail network for the sale of game consoles GameStop (GME) on the premarket are growing by 10.3% on the news board of directors company approved the split of ordinary shares in the proportion of 4 to 1.GameStop is an American mid-cap company. Its market capitalization is currently less than $9 billion, and the claims of such companies, due to low liquidity, can rise and fall by double digits during the day even without any fundamental reasons.

Remember that at the beginning of 2021, the shares of this company exhibited a substantial increase, which is why the claims of this well-known issuer on social networks on the stock market began to as “meme shares.”However, today’s growth in the premarket has just grounds – splitting shares in the proportion of four new shares instead of one old will increase the number of shares in circulation and make them more liquid and convenient for speculative operations, the expert notes.

Stock splitting almost disappeared from U.S. stock markets before Apple Inc. (AAPL) and Tesla Inc. (TSLA) revived the practice in 2020.Amazon.com Inc. (AMZN) followed suit this year. These moves have triggered a rally in company stocks, as retail investors tend to favor lower-value stocks.

The high cost of a stock is usually the reason for its fragmentation. The split has no impact on the financial performance of the company and its capitalization. Therefore, there are no risks for shareholders here: a break does not lead to a dilution of the share but only leads to an increase in the number of shares in circulation. The split allows the issuer to reduce the value of its shares and, thus, increase the liquidity of securities and make them more accessible to investors.