One meme stock that’s squarely in focus today for many investors is GameStop (NYSE:GME). Shares of GME stock have surged more than 8% higher in early afternoon trading, as the video game retailer reported an overhaul of its rewards program.
The company’s PowerUp Rewards membership will change its name to GameStop Pro. In addition to a name change, this membership overcall will come complete with a price increase from $15 per year to $25 per year for users. That said, those who sign up for GameStop Pro will also be eligible for greater rewards on company merchandise.
These discounts will be applied to various pre-owned games and collectibles, with a points system that allows for 2% cash back in the form of in-store credits on all purchases. Plus, a 5% discount will be applied to key items. Users will also receive a $5 coupon monthly to use on essentially anything in-store or online.
Let’s dive into why this move is generating so much buzz among GameStop investors.
Why Is GME Stock Surging Today?
GameStop’s recent shift away from becoming an e-commerce powerhouse to focusing on its brick-and-mortar locations appears to be taking shape. This membership rewards program overhaul appears to be a key missing piece many investors were looking for in this restructuring.
By all accounts, investors appear to be making this change out to be a net positive for the company. Yes, greater discounts will become possible for loyal customers. However, it’s expected that many of these discounts may be offset by pricing that’s been forced higher. And if the company’s core customer set is buying more frequently, and in larger amounts to take advantage of the rewards, that’s a win for the company as a whole.
We’ll have to see how these changes translate into revenue and earnings in the coming quarters. However, considering this past quarter was the first quarter of profitability in some time, and these changes could materially (and positively) impact both the top and bottom lines, there’s a lot to like about this move.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.