(Bloomberg) — In a Reddit post last week, a day trader who helped push GameStop Corp. shares to record highs said he stopped by his local store to hand out $100 bills to employees as a thank-you. He encouraged other traders who’d seen a windfall to do the same.
“They are a part of the reason we are up so much,” the trader posted, attracting 442 comments.
But other than some handed-out cash, GameStop employees won’t be sharing in the riches.
Reddit day traders have enjoyed massive gains in GameStop’s stock, which reached a closing high of $347.51 on Wednesday. Though the shares dropped as much as 32% on Thursday, they remain up roughly 1,200% this year. The retailer’s employees, meanwhile, have suffered from shuttered stores, wages they see as subpar and the struggles of working during the Covid-19 pandemic.
More than 1,000 stores are slated to go dark during GameStop’s fiscal year ending in January. And the company plans to close more stores in the coming year.
GameStop staffers who keep their jobs typically make around $11 an hour, according to Salary.com. That’s lower than at Walmart. Retail sales positions on GameStop’s site ask for a high-school diploma and six months of regular work experience.
Against that backdrop, the stock runup — goosed by the Reddit subgroup r/WallStreetBets — has left a bad taste in the mouth of some.
“Honestly it just sucks that people care more about the stock going up than the fact GameStop squeezes everything it can out of its employees,” according to a Redditor who goes by Angel. He says he worked at a GameStop in Texas for 10 years.
Many stores require employees “to do the job of two to three people in a day,” Angel, who asked not to give his real name, said in an email. “Most don’t get breaks, and there’s huge scrutiny to meet the increasing performance goals. And if you don’t hit them it’s because ‘you aren’t trying hard enough’ and if you do it’s because ‘the goals are too low.’”
GameStop, based in the Dallas suburb of Grapevine, declined to comment on its employee policies.
Wage Complaints
Another Reddit user, Azrane, who also identified as a GameStop employee, noted that the stock performance has no bearing on employees beyond the executive suite.
Azrane said it was “tone-deaf and infuriating” to see people from r/WallStreetBets “celebrate how much money they have made on the stock when this company will never pay its workers a fair living wage that leaves us happy, comfortable, and not having to live with the threat of getting sick and missing work looming over our heads.”
The Reddit group dedicated to GameStop is filled with discussions by users identifying themselves as employees. There, the stock drama isn’t front and center. Complaints are more likely to be about being short-staffed and dealing with clueless customers.
But the stock rally could ultimately benefit employees by improving the company’s fortunes, said David Cole, head of research firm DFC Intelligence.
“A lot of the runup is from smaller investors who are personal fans of the company,” he said. “It shows that there is a lot of love out there for GameStop. Even if the bubble bursts, the eventual reality is likely to be better than before when GameStop was written off for dead and investors were basically taking death bets.”
The rally — if it lasts — could help GameStop raise more money for a turnaround strategy, either by selling stock at higher prices or refinancing. And that might save jobs.
“GameStop is in a unique position now where they do have choices,” said John Patrick Lee, product manager at VanEck, an investment firm that doesn’t own shares in the retailer. “With this new market value, they have an opportunity now to move toward the future of the video-game market. Do they integrate with an esports team? Do they take their physical stores and convert them into a place where people play games? They have options where they used to not have options.”
GameStop is slated to provide a strategy update in January. In the last few weeks, it gained three board members, including activist investor Ryan Cohen, the former head of pet-supply site Chewy.com.
Cohen has bold ambitions for the chain, such as adding more merchandise and taking on Amazon.com Inc.
But for employees, the most pressing issue may be when GameStop’s resurgence will reach them.
(Updates shares in fourth paragraph.)
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