GameStop shares soar 10% after the Reddit darling said it plans a stock split for the first time in 15 years

• GameStop shares surged 10% on Friday after the video game retailer said it plans a stock split.
• The Reddit darling said Thursday it wants to increase share count to pay a stock dividend and for future needs.

$4 shares rose 10% in Friday's market open after the video-game retailer said it plans to seek shareholder approval for a $4.

In an $4 late Thursday, GameStop said it intends to increase the number of outstanding Class A common stock to 1 billion from 300 million for two reasons.

One, the company wants to pay a dividend in the form of additional stock by splitting its shares. Two, the increased share count would be used to "provide flexibility for future corporate needs," it said in the filing.

When companies choose to implement a stock split, they are effectively increasing the overall number of outstanding shares and lowering the value of each individual share.

Stock splits have become a hot trend recently. $4 said this week it $4 for the second time in two years. $4 and $4 both announced plans for 20-for-1 stock splits this year, and stocks of all three companies surged after the moves.

GameStop shares were last up 10% at $183.75 a share, as of 9:40 a.m. ET.

After shooting higher during the Reddit-fueled trading frenzy last year, "meme stock" GameStop has since been associated with wild trading volatility. In mid-March, the stock dropped after the company $4 during the holiday season.

But since chairman Ryan Cohen last week said he bought $4 in the company, GameStop has been on a tear — lifting the stock to a 40% gain in the last 30 days.

GameStop has $4 in March 2007, doubling every single share held by an investor in a 2-for-1 split.

It didn't specify the ratio by which it intends to split its stock now. It also didn't lay out the breakdown of the stock dividend that it intends to pay, nor of the funds it needs for other use.

Additionally, GameStop said it seeks shareholder approval for a new incentive plan to support future compensatory equity issuances. This possibly suggests selling more stock to investors.

Its stock dividend is contingent on final board approval, the company said.

Meme stocks, or heavily shorted shares that were boosted by retail investors on Reddit, have seen somewhat of a comeback in the last two weeks as $4. Each stock has rallied on varying news from the Reddit darlings.

Cohen's efforts to $4" are yet to produce concrete results. Wedbush analysts say it continues to trade at levels that are "completely disconnected from the fundamentals" because of support from certain retail investors.

GameStop has yet to set a date and location for its annual shareholders' meeting, but it said these would be announced in a definitive proxy statement. GameStop's $4 was filed on April 22 last year.

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