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GameStop used to be the destination for video games. Then it became the archetypal “meme stock” in 2021, when a band of Reddit-reading retail investors blocked hedge fund shorts on the company’s stock, sending the company’s stock skyrocketing. There’s even a movie about it. But its eccentric, some would say visionary, is back with a plan that he thinks will rival the wild days of half a decade ago.
Despite that sale, the company’s CEO Ryan Cohen said in an interview with The Wall Street Journal he aimed to turn the $11 billion company into a $100 billion-plus business by acquiring a publicly traded company. The billionaire envisions the company going beyond traditional video game and collectible sales.
“It’s ultimately going to be genius or total, total stupidity,” Cohen told The Journal.
In a world where physical video games are quickly becoming obsolete, the move signals the company’s desire to modernize. The company’s momentum in 2021, which sent the video retailer’s struggling stock up 2,700%, was fueled in part by hedge funds and retail investors’ understanding that the company was getting old. However, Cohen believes he can restore that image and find a buyer willing to pay hundreds of billions for the business.
GameStop did not immediately respond luckThis is a request for comment.
It’s unclear which company might fit the bill for the acquisition. However, Cohen told The Journal that he believes the match could be in the consumer or retail industry. The billionaire has a strong carrot that motivates him to carry out this purchase. Earlier this month, the board of directors Office has partnered it voted to increase Cohen’s pay package to more than $35 billion entirely in stock options—if he can increase the company’s market capitalization to $100 billion and achieve $10 billion in Cumulative Performance EBITDA. For context, Cohen raised the company’s market capitalization from $1.3 billion by 2021 to nearly $9.3 billion, a 615% increase in stockholder value, though far from the $100 billion goal.
What experts think is possible
Michael Pachter, a managing director of equity research at the wealth management firm Wedbush Securities, is deeply skeptical of Cohen’s ability to fulfill the claim. “I can give you a higher than 0.001% chance that it will reach $100 billion,” Pachter said. luck. “But I took the bottom of that bet. I’d say no, it’s not going to happen.” Pachter’s skepticism stems from the fact that Cohen has yet to demonstrate an idea or a unique competitive advantage beyond his company’s cash pile, which was valued at $8.83 billion as of October.
The company has struggled to modernize in recent years amid a series of strategic mistakes. Last May, GameStop tried to attract crypto enthusiasts after it SAYS it bought 4,710 Bitcoins, at the time worth about $500 million, in an attempt to amend the fall in the company’s profits. The move gave the company’s stock an initial bump but soon fell 10% the day after the announcement. And in June, Cohen SAYS in a quarterly investor call the video game retailer will focus on trading card sales, sending the company’s stock tumbling 20%.
“He went into a business where the physical game model was threatened by the digital download model and he couldn’t do anything,” Pachter said. “He couldn’t have done anything to make that better.”
Cohen is no stranger to big claims. The billionaire first made a name for himself after launching an online pet food retailer Chewythat was before got to PetSmart for $3.35 billion and went public in 2019 with a value of more than $8 billion. Cohen also bought GameStop stock. He is the largest individual investor in the company with a stake of over 9%. Although Pachter doubts Cohen can replicate his success.
“It’s easy to say, ‘I’m the next Warren Buffett,'” Pachter said. “But is Ryan Cohen a ‘twice-caught-lightning-in-a-bottle’ guy? I don’t know.”
The company’s stock saw a recent uptick after hedge fund investor Michael Burry, best known for his prescient shorting of the US housing market before the 2008 financial crisis, SAYS he bought shares of GameStop stock. Burry recently invested in the company’s stock, detailing his GameStop stake in a Substack post on Jan. 26, said he bought the company’s shares as part of a long-term investment plan.
“I believe in Ryan,” Burry wrote in the post, referring to Cohen. “I like the setup, the management, the strategy of what I see. I’m ready to hold for a long time, and I’m excited to see where it goes.”
This story was originally featured on Fortune.com
