GameStop’s potential new strategy: Let Ryan Cohen buy other stocks with company cash

A
GameStop
store
in
a
strip
mall
in
Chicago
on
March
16,
2023.

Scott
Olson
|
Getty
Images

Struggling
retailer

GameStop
is
giving
its
CEO
and
chair
Ryan
Cohen
even
more
control,
including
the
ability
to
use
company
cash
to
buy
other
stocks.

In
its
quarterly
report
released
Wednesday
night,
GameStop
announced
two
changes
to
its
corporate
investment
plan:
company
cash
can
now
be
used
to
buy
equities
instead
of
just
short-term
debt,
and
that
Cohen
is
in
charge
of
the
investments.

“Mr.
Cohen
directs
the
investment
activity
of
the
Company
in
public
and
private
markets
pursuant
to
authority
granted
by
the
Board
of
Directors.
Depending
on
certain
market
conditions
and
various
risk
factors,
Mr.
Cohen,
in
his
personal
capacity
or
through
affiliated
investment
vehicles,
may
at
times
invest
in
the
same
companies
in
which
the
Company
invests,”
the

filing
said.

“Such
investments
align
the
interests
of
the
Company
with
the
interests
of
related
parties
because
it
places
the
personal
resources
of
Mr.
Cohen
at
risk
in
substantially
the
same
manner
as
the
Company
in
connection
with
investment
decisions
made
on
behalf
of
the
Company,”
the
filing
continued.

The
company
did
not
hold
a
quarterly
conference
call
with
Wall
Street
analysts,
but
Wedbush’s
Michael
Pachter
called
the
decision
“inane”
and
“alarming.”

“Investors
have
a
myriad
of
investment
vehicles
available
to
them
and
therefore
do
not
need
GameStop
to
act
as
a
mutual
fund.
If
GameStop
truly
believes
in
the
value
of
its
shares,
it
should
use
its
excess
cash
to
buy
back
stock,”
Pachter
said
in
a
note
to
clients.

The
change
comes
as
Cohen’s
attempted
turnaround
at
GameStop
is
floundering.

The
company
reported
net
sales
of
$1.08
billion
for
the
quarter
ending
Oct.
28,
down
9%
year
over
year
and
off
25%
since
the
same
period
in
2019.
The
company’s
net
loss
did
shrink
year
over
year,
but
that
was
largely
due
to
aggressive
cost
cuts,
including
closing
stores
in
Europe.

Cohen,
the
co-founder
of

Chewy,
bought
shares
in
GameStop
in
2020
and

joined
the
board
in
2021
as
GameStop
became
one
of
the
key
stocks
in
the
WallStreetBets
meme
trading
phenomenon.
Cohen’s
e-commerce
experience
fueled
hopes
that
he
could
help
modernize
the
brick-and-mortar
video
game
retailer.

But
the
company
never
released
a
detailed
turnaround
plan
and
has
churned
through
executives.
GameStop

fired
CEO
Matthew
Furlong
in
June,
and
the

company’s
chief
financial
officer
resigned
shortly
thereafter.
Cohen
was

appointed
to
the
CEO
role
in
September.

Shares
of
GameStop
closed
at
$14.84
per
share
on
Wednesday,
down
more
than
80%
from
their
meme-trade
high
in
January
2021.
The
stock
rose
10%
Thursday.

GameStop’s
stock
is
well
below
its
meme
stock
era
highs.

Cohen’s
status
as
a
celebrity
investor
for
the
retail
trader
crowd
has
extended
beyond
GameStop,
most
notably

trading
in
and
out
of
Bed
Bath
&
Beyond.
That
retailer
filed
for

bankruptcy
protection
in
April.