GameStop, the Fortune 500 company based out of Grapevine, Texas, used to have a sizeable hold in the games market, but has been struggling over the past several years. GameStop finally entered into an agreement with RC Ventures, an investment group led by Ryan Cohen, along with Alan Attal and Jim Grube. The three will be new additions to GameStop’s Board of Directors, and are expected to further improve GameStop’s business standing.
GameStop shares have climbed substantially since the announcement, rising to their highest price since 2016. On Wednesday morning, stocks rose to over $34, briefly peaking around $38. Stocks settled at $31.40 by the close of business. Analysts don’t necessarily think this increase is only part of a short squeeze for GameStop, but think it could be part of a longer buying pattern.
The price of GameStop’s stocks have been steadily declining since 2016, with stocks hitting their lowest points between Summer 2019 and Summer 2020. This development is an enormous progression from the $4 stocks the company had last summer. Stocks prices have been steadily rising since the Fall of 2020, which was possibly encouraged by anticipation for the new generation of gaming consoles as well as GameStop’s multi-year partnership with Microsoft.
After the Board of Directors shakeup, it seems that investors are hoping for more good news in the company’s future. Cohen, Attal, and Grube were all chief management at Chewy, a successful online pet supply retailer that sold to PetSmart for over $3 billion in 2017. GameStop seems excited as well about the three new members of its Board, noting how their “skillsets will support the Company’s continued focus on optimizing core operations and creating a powerful and exciting ecosystem for games and entertainment.”
Cohen owns a large portion of GameStop’s shares, and has continually been involved in the company’s recovery efforts as a major investor. He has helped create marketing plans for the company, and in November even penned an arguably scathing letter to the GameStop Board demanding change. While in that same letter, Cohen stated that RC Ventures didn’t want a seat at the Board of Directors, his mind must have changed. Whatever may have happened behind the scenes, the letter must have served as a call to action for the struggling company.
It looks promising for such a skilled and invested shareholder to join the Board to help push GameStop into the modern digital age. While GameStop’s 2020 holiday sales were down overall, the company reported that e-commerce sales rose 309%, and made up a third of the entire revenue for the holidays. Possibly one of Cohen’s biggest pushes is for GameStop to focus more on digital services instead of its brick-and-mortar stores.
Times have certainly been tough for GameStop. The reasons for the company’s decline are often debated, but everyone involved can agree that change has to happen for GameStop to survive and thrive. Stock prices can often reflect consumer confidence in a business, so it can be seen as good news that stocks are steadily rising. With the new additions to GameStop’s Board, the company will hopefully see more improvements in the future.