Shares of GameStop (NYSE:GME) stock rose 7% overnight as Ryan Cohen, who helped small investors take over the game store stock in 2021, became CEO. Cohen had been executive chairman.
The move was revealed in an 8-K report to the Securities and Exchange Commission (SEC). The report said Cohen won’t be paid for his new job and will continue to do things outside the company. Cohen’s RC Ventures owns a 12% stake in Gamestop.
GME stock opened this morning at $18 per share, a market capitalization of $5.67 billion, close to expected 2023 sales of $5.8 billion. The problem is that while losses are narrowing, GameStop hasn’t seen a profit in years.
Can the Savior Save?
Professional analysts dismissed the move as a stunt. The last Wedbush report, in June, offered an “underperform” rating and a price target of $6.20.
After taking control of GameStop in 2021, Cohen hired an Amazon (NASDAQ:AMZN) executive, Matt Furlong, as CEO. The short squeeze became the subject of the new movie Dumb Money. Furlong was let go in June after a move into non-fungible tokens (NFTs) failed, with Cohen becoming executive chairman.
Cohen gained fame as a co-founder of Chewy (NASDAQ:CHWY), which was sold to and then taken public by PetSmart in 2019. He cheered on the GameStop short squeeze from the sidelines, pushing for an overhaul of management, but isn’t portrayed in the movie.
While gaming is a huge business, it’s mostly done online. Gaming consoles are sold at mass market merchandisers, and the high-end action has moved to PCs. Cohen has yet to say how he’ll turn GameStop around. His last public post on X, formerly Twitter, was in August, and the dog he said inspired Chewy’s founding died in July.
GME Stock: What Happens Next?
Wall Street believes Cohen has gotten caught in his own game. A Wall Street Journal report spent more time on his involvement in Bed, Bath & Beyond, which went under earlier this year, than on GameStop operations. His reputation is now very much on the line and in the game.
As of this writing, Dana Blankenhorn held a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
