GameStop store signage is seen in New York City.
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GameStop said Monday that Chewy co-founder Ryan Cohen is chairing a new committee geared toward transforming the retailer into a technology business. The stock is soaring.
GameStop (ticker: GME) said the board of directors formed the strategic planning and capital-allocation committee that includes Cohen, former Chewy (CHWY) executive Alan Attal, and Kurt Wolf. Cohen, and Attal joined the board in January, along with Jim Grube, another former Chewy executive. Wolf, managing member and chief investment officer of activist investor Hestia Capital Management, was elected to GameStop’s board in June 2020.
GameStop made headlines earlier this year as its shares turned parabolic amid massive interest from both retail traders, battling with hedge funds that were betting on its price to fall. The moves were likely supercharged by options activity and the stock’s sky-high short interest. The company had been looking to reinvent itself for years, which included a reboot outlined in 2019 with goals of cutting costs and forging a stronger digital presence.
About a year ago, GameStop stock was cheaper than a Happy Meal. But as the summer wound down, Cohen helped spark a rally by building a stake in the company and later urging the board to better embrace digital offerings to better compete with e-commerce giants like Amazon. com (AMZN).
In the weeks after Cohen and his associates joined the board, GameStop transformed into a cultural battleground where retail investors rallied around the stock seeking to thwart hedge funds betting it would fall. The stock flew to as high as $483, before falling back to Earth. But shares have rebounded quite a bit in recent weeks. GameStop stock is up 25% to $171.65 in Monday morning trading, while the S&P 500 index was up 0.8%.
GameStop said the committee will hone in on ways to transform the retailer into a technology business by looking into operational objectives, capital structure, and allocation priorities.
Based on GameStop’s timeline, the committee was formed earlier this year. Following the committee’s formation, the company said it appointed a chief technology officer, hired executives to lead a customer care and e-commerce fulfillment, respectively, and announced the planned departure of Chief Financial Officer Jim Bell. Barron’s reported at the time that Bell’s departure was prompted by the company’s desire to find an executive with a more technology-focused background.
Cohen and his colleague’s pedigree competing with Amazon in the online pet-retail business could bode well for the company’s future. But the stock has soared beyond even the most optimistic analyst expectations. The company still faces challenges to its physical disc businesses that have been accelerated by the pandemic.
Write to Connor Smith at [email protected]
