GameStop: Not ready for the stock split

On share of GameStop (WKN: A0HGDX) there is another reason for price action. During this week, the shares rose by 10% without further ado. The reason is clear: management announces share split. Wow! Which game changes for the investment dissertation.

10% price increase for a share split? It fits into the scheme. The shares of the US company are in fact not ready for such a capital measure. Of course, you can also argue about that. But let’s look at a few details.

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GameStop: Not ready for the stock split!

Even after the price increase, the GameStop share is listed at a share price of around 127 euros. The management announced that they wanted to implement a 1: 4 split. This means that each former investor gets three new share certificates booked in addition to his existing ones. On the other hand, the share price is quarterly.

But is it really necessary to visually reduce the stock? For 127 euros it is actually possible to trade them without any problems. The trade itself seemed volatile enough that even the latest speculative bets were fully settled. It is doubtful whether this capital measure is really necessary.

Overall, GameStop’s management, meanwhile, is, in the short term, oriented. For my taste, you go very deliberately in directions where there may be price momentum. For example, let’s remember the announcement that they want to dive into the NFT market and give players their own wallet. This could be a step towards the crypto universe. But it also led, above all, to one thing in May: a price increase.

GameStop investors should also ask themselves where management’s interest lies. Such gimmicks require time and attention from those responsible. Actually, the thesis is that you want to position yourself stronger in e-commerce to revive the core business. How’s it really going here?

E-commerce would be the business-oriented specialty!

Stock splitting and NFT platform can trigger price action. But the actual turnaround and growth must come from the core business. Especially in times of inflation, it is crucial to place oneself on a more solid foundation operationally. I find it remarkable that we have time for such secondary war theaters here.

Revenue rose to $ 1.378 billion in the first quarter from $ 1.277 billion a year earlier. But management has not provided any concrete figures for the first-quarter update. Here it only means that one is dependent on new talents who can provide knowledge in blockchain games, e-commerce and other markets.

GameStop is still a strange stock to me. The share split again makes me question what the management is doing right now. Foolish investors should ask themselves at least once if the operational business is really in the forefront.

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Vincent owns none of the aforementioned shares. The Motley Fool does not own any of the listed shares.

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