GameStop Stock Mania Is Making Its Turnaround Possible
The Reddit-fueled surge in the video-game retailer’s share price is paying off, helping to raise cash and boost its chance of success.
A $1 billion stock sale will allow GameStop to follow through on entrepreneur Ryan Cohen’s vision for the company.
Photographer: Jakub Porzycki/NurPhoto via Getty Images
What a crazy year it’s been for GameStop Corp. Last April, it was left for dead. Predicting an imminent demise for the retailer, hedge funds piled on their bearish bets and the company’s market value sank to a few hundred million dollars. A year later, thanks to big buying from the Reddit crowd, GameStop is worth about $13 billion and is now looking to raise as much as $1 billion in capital to fund internet entrepreneur Ryan Cohen’s turnaround plan. This year’s GameStop stock mania may make its business transformation possible.
The retail investor frenzy over GameStop shares has been well covered. But the stock’s rally has some fundamental underpinnings. It is not a coincidence that the surge began days after Cohen was appointed to its board on Jan. 11. Since joining in an official capacity, the co-founder and former chief executive officer of online pet-supply retailer Chewy Inc. has moved quickly, taking control of the company’s strategy and pivoting it faster toward e-commerce. He has hired nine executives — five of whom had experience at Amazon.com Inc. — including a new chief operating officer and chief technology officer. Several of the additional hires also came from Chewy, a sign of confidence from former colleagues in COhen’s abilities. Now, the company is raising the funds needed to implement his plan.