In a positive turn of events from its recent bad luck, GameStop is reporting that its market shares have risen a significant amount, thanks to a new investment plan the retailer has yet to unveil. The co-founder of another consumer retailer has acquired a large stake in GameStop’s shares and is the driving force behind a new movement for the retailer to challenge one of the biggest e-commerce giants: Amazon.
GameStop made the news recently for announcing a second wave of PS5 pre-orders will be taking place online and in-store at the retailer tomorrow, but it wasn’t that long ago that GameStop was doing very poorly in terms of earnings and market shares. Although many video game producers and developers have enjoyed success during the pandemic due to the higher volume of gamers in lockdown, a large portion of GameStop’s business model relies on in-store shopping, and COVID hurt it very badly.
Enter Ryan Cohen, co-founder of a pet supplies retailer called Chewy.com, who bought an almost 10% share in GameStop and is taking his big plan to the board and GameStop directors. His plan is to become an even bigger part of GameStop’s operations and financial planning in order to expand the merchandise line and bring GameStop back from its Q2 losses.
Bloomberg reported on Cohen’s plan, leading to GameStop surging 28%, as people seem optimistic about Cohen’s idea to expand the range of products GameStop offers and ship it quickly to consumers, which will hopefully not only end the dying process of the retailer many people foresaw and instead bring GameStop up to Amazon’s level as a competitor.
No doubt console sales are also playing a big part in the stock surge, as are other retailers who sold out of PS5 and Xbox Series X/S pre-orders, but people seem to be buying into Cohen’s plan, specifically investors with access to financial resources. Cohen could very well be the man that saves GameStop after so many people saw it struggling during COVID and resigned themselves to writing the retailer off entirely. However, since Amazon controls such a large portion of the e-commerce and shipping industry, Cohen will have to bring the big guns out to challenge its business model, something he hasn’t explicitly detailed yet.
It’s important to note that GameStop may very well decide not to implement Cohen’s ideas after he meets with the board and directors, but some people are saying that ignoring Cohen’s plan would be signing the retailer’s death warrant. After all, stocks didn’t start rising until Cohen revealed his plan, so the directors at least have the investors’ votes of confidence; still, people will have to see tuned to see what GameStop’s fate will be and what direction it goes.
Source: Bloomberg
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