Yahoo Finance Live anchors discuss GameStop’s plans for a 4-for-1 stock split.

Video Transcript

- Let's talk about GameStop, it's back in the headlines right now in free market up by about 5.5% today. The meme stock announced a four for one stock split. That's planned for later this month. Just add this one to the list, Sozzi, of companies that have announced some of these stock splits over the course of this year. We've heard from Alphabet, of course Amazon as well, and then additionally you think about Shopify and even Dexcom. And, oh yeah, how can we forget Tesla? That company putting out a stock split, the second one over the past two years. And so, you've got to get a sense of where these companies are also trying to appease, perhaps, even more of that retail investor out there by making these prices a little bit more feasible to jump into at the share price level?

- Unclear to me, but I will say, though, GameStop, top ticker on our platform, has been since the news broke after the close yesterday. Unclear to me if those four additional shares will mean GameStop's earnings call will be four times longer, so it will go from nine minutes to about 36 minutes, or they'll share four more ideas on how they will change the company instead of zero that we've gotten so far.

And I'm not making light of this because these continue to be major questions that, I think, a lot of institutional investors have on GameStop, but also the retail community. You go into the Wall Street Bets and they're still very strong supporters of GameStop and Chairman Ryan Cohen, and whatever he may or may not be doing at the company. I do know what he is doing, he's been really taking thinly veiled shots at Bed Bath & Beyond on Twitter since the CEO's ouster last week.

But, nonetheless, they want more information in this company. And I think that's why you're seeing GameStop shares down 41% over the past year because this entire retail community has gotten squat from that management team. I got to tweet this morning, Brad, someone imploring me to go check out what GameStop has been up to in the past few weeks. I went over to the investor relations page, they've been essentially up to nothing. The last time we've heard from GameStop was in May, they launched a crypto wallet just before the route in crypto prices. Doesn't sound like a great strategies to me.

- Yeah. The last time I wrote up a story on GameStop I also got a lot of hate mail and, particularly, it was not even my take, it was one of the strategists, one of the equity analysts that covers the company saying that they lost $140 million during the holiday quarter, pretty embarrassing. If they lost that much on the holiday quarter, they're probably going to lose a couple of million dollars a quarter going forward if they keep this up.

Speaking directly towards the expenditures that they are continuing to put into things, like an NFT wallet or a crypto wallet. But at the end of the day, it's still how are you going to produce revenues and increase margins or just produce margins and maintain them over an extended period of time to also retain the amount of shareholders that have dove headfirst into this stock over the past year and a half? Still well off of some of the meme stock frenzy highs of $400 plus intraday that we had spotted that into in 2021, early in 2021. But still, even at this point in time there is a ton of fanfare, kind of a cult following that still follows around GameStop.

- Well, Brad, let me put this one to you real quickly before I go on to our next ticker here. What happens if the country goes into a recession? The past two, two and 1/2 years of this meme stock mania, in large part being driven by GameStop, has been operating under the notion that video game sales, whether they're digitally downloaded or physical consoles or physical games, that stays strong. Well, that plank might be coming out of that story very soon.

- And even if it does stay strong, what's to say that somebody going into a retail experience within GameStop, especially if they can just buy that title over the Cloud through a console that is already connecting them to a host of different titles and content, gaming content that all of the console providers are looking to make sure that they're beefing up their own revenues based on as well.

And so, I think if they are continuing to go direct to consumer in this gaming environment, where does that leave the middleman in GameStop, who had tried a Cloud play in 2014, even through 2017, but had to sunset spawn labs after an extended period of time. I think this is a big question for Ryan Cohen and team going forward from this point about where they're placing their revenue intentions. And then, additionally, what's going to give them the highest amount of margin from this point forward.