- GameStop’s share value remains absurdly high as retail investors maintain their positions.
- That stock value is completely unrelated to GameStop’s business.
- The ailing game retailer is in the midst of a “transformation,” but new leadership isn’t talking about plans.
- Visit Insider’s Business section for more stories.
Forget the absurdly high value of GameStop stock – it has nothing to do with the company, and GameStop’s leadership has acknowledged that.
“The market price of our Class A common stock has been extremely volatile and may remain volatile due to numerous circumstances beyond our control,” GameStop leaders admitted in an SEC filing earlier this year.
Before the company’s stock price exploded as a so-called “meme stock”, GameStop was in a… years of death spiral.
That’s because GameStop, like Sam Goody and Tower Records before it, is in the business of selling plastic discs, and more people than ever are buying their games digitally. Just as stores selling music on compact discs disappeared with the rise of digital music services, and stores selling movies on DVD disappeared with the rise of digital movie services, GameStop faces the same problem with gaming.
To stave off oblivion, the ailing games retailer is also undergoing a “transformation” led by Wall Street darling Ryan Cohen – the former CEO of Chewy who is a major GameStop investor and the newly elected chairman of the board of directors of the company. company.
Over the past six months, Cohen has led an initiative to: Completely replace GameStop’s executive suite with high-level Amazon employees. He hopes to make GameStop the “Amazon of games,” just like Chewy did for pet supplies.
So, how is Cohen going to do that? That remains to be seen, and Cohen says no.
“You won’t see us talking about a big game, making a bunch of lofty promises or telegraphing our strategy to the competition,” Cohen told investors at the company’s annual shareholder meeting on Wednesday. “We know some people want us to put together a very detailed plan today, but that’s not going to happen.”
However, Cohen previously outlined some of his plans for GameStop in a letter he sent to the board last year — before he was chairman of that same board and before his plans to “transform” the company had begun.
“GameStop’s challenges stem from internal intransigence and reluctance to quickly embrace the digital economy,” the letter said:. “GameStop needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences – not remain a video game retailer that over-prioritizes its physical footprint and roams the online ecosystem.”
During a meeting with shareholders on Wednesday, Cohen acknowledged the potential risks in attempting to transform GameStop.
“We have a lot of work ahead of us and it will take time,” he said. “We’re trying to do something that no one in the retail space has ever done before.”
Cohen representatives declined requests for comment.
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