Should You Buy GameStop Ahead of its Stock Split?
Will the Gamestop Split Boost GameStop's Stock?
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Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.
2022-07-09 11:30

GameStop Stock Split
Here we go again! GameStop (NYSE:GME) announced that it would be splitting its stock 4 shares for 1 on July 22nd. Is that big news? It is to some. Recent history tells us that a stock split announcement usually sends a stock price soaring up until the split. Most investors know that a stock split has no material change in the company’s value. In fact, I’m not alone in questioning what the motives are behind GameStop’s split.
Should You Buy GameStop Ahead of its Stock Split?
Earlier this year, I discussed the splits of Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) as a way for the companies to potentially list on the Dow Jones Industrial Average. Since it’s a price weighted index, the price of the shares matter to its weighted allocation. But GameStop’s stock split is confounding, aside from appealing to its retail traders and making some new headlines to keep the company relevant.

But the question remains: should you buy GameStop before the split?

Should You Buy GameStop Before the Split?
You certainly could, I wouldn’t blame you for taking advantage of it. The problem with GameStop continues to be the never-ending digital transformation. The non-custodial crypto and NFT wallet is cool and for a crypto fan it’s great to see these things being built. But it came at the absolute worst possible time for the crypto industry which is now seemingly entering another crypto winter.

The NFT marketplace that hasn’t launched yet? Well, if cryptos are down, I don’t need to tell you about how NFTs are doing. GameStop may be re-thinking its strategy now especially after the colossal failure of the Coinbase (NASDAQ:COIN) NFT marketplace. It’s unimaginable to see how badly Coinbase has failed in this regard, but that’s best saved for another article.

Can Web3 and digital assets save GameStop? Earlier this week we saw some internal strife from the company when CFO Mike Recupero was suddenly fired. Reports are that he wasn’t a good fit with Chairman Ryan Cohen who wants a more hands-on leader. The company also announced staffing cuts across all departments to continue its aggressive transformation.

Is that a good sign though? Since the start of 2021, GameStop has hired more than 600 executive positions, and now they’re letting a good number of those go, including the CFO who was hand picked. The stock jumped higher after the news but then tumbled back down in after hours trading. One has to wonder if the price bump was from the stock split on a bullish day for the broader markets.

Is GameStop a Good Investment?
Honestly, I just don’t know right now. I do know I wouldn’t just buy a stock for the stock split, just to hold a few more shares. While I love what Cohen did for companies like Chewy (NYSE:CHWY), I can’t help but think that GameStop is currently spinning its tires, and that the stock split is a distraction from a mass round of firings and a digital transformation that isn’t going as smoothly as they thought it would. But hey, I could be wrong! If I were to buy a stock that is going to split, I’d rather look at Tesla (NASDAQ:TSLA) or Alphabet (NASDQ: GOOGL).


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

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2022-07-09 11:30

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About the Author
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.


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