GameStop Is Issuing a ‘Special Dividend’ Next Week. Why the Stock Is Falling.

GameStop stock has been hammered this year but was still up 27% over the past 12 months as of Thursday’s close. (Michael M. Santiago/Getty Images)

Key Points

• GameStop shares fell 3.6% to $26.24 in premarket trading as the company prepares to distribute warrants.
• Shareholders will receive one warrant for every 10 shares owned, allowing them to buy stock at $32.00 until Oct. 30, 2026.
• The warrants could generate up to $1.9 billion for GameStop, which plans to use the funds for general corporate purposes.

Shares of GameStop were falling Friday as the company gets closer to distributing warrants to shareholders that will allow them to purchase more stock—and lock in gains if the price rises above a certain level.

Existing stockholders as of Friday will receive one warrant for every 10 shares they own. Each warrant allows them to purchase one share of common stock at $32.00 until Oct. 30, 2026. GameStop disclosed the “special dividend” last month and is distributing the warrants on Tuesday.

GameStop stock was down 2.5% to $26.54. The shares are down 15% this year but up 24% over the past 12 months.

Thursday was the last session to buy to qualify for warrants, which means the stock is likely less attractive now than it was then.

Warrant issuances can also trigger worries about potential dilution. Should GameStop shares rise above $32 and some investors exercise their purchase warrants, the company will issue new stock, reducing the percentage ownership of other investors.

If exercised, the warrants could generate up to $1.9 billion in proceeds for GameStop. The company plans to use the cash for general corporate purposes, it said in a Securities and Exchange Commission filing.

Write to Nate Wolf at nate.wolf@barrons.com