GameStop has been hit hard as more people download games rather than using physical discs.
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saga took another turn on Friday as shares fell after the company’s four-for-one stock split.
stock slid 7% to close at $35.78 on Friday. GameStop stock began trading on a split-adjusted basis, meaning one share was worth one-fourth of what a share was worth before the split. GameStop stock closed at $153.47 on Thursday, so the price was $38.37 on a split-adjusted basis.
Anyone who was a GameStop shareholder of record at the close of business on Monday got three additional shares. Investors who bought GameStop shares between Tuesday and Thursday got their additional shares from the seller.
Stocks splits change nothing fundamentally about an underlying company because they are akin to cutting the same pie into smaller slices.
That said, some investors pile in ahead of stock splits because stocks that do split tend to outperform the market. That is likely a case of the tail wagging the dog, since stocks with strong momentum are more likely to split than market laggards. That doesn’t seem to be the case for GameStop stock, at least so far.
GameStop stock has fallen 4.9% in 2022 and is down 22% from where it traded 12 months ago. The
is down about 17% so far this year, putting it some 10% below its level at this time in 2021.