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GameStop CEO Ryan Cohen is now free to invest the retailer's cash in stocks, Warren Buffett-style (markets.businessinsider.com)

submitted 11 months ago by [email protected] to c/[email protected]

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All of GameStop's nearly $1 billion in cash is now at Ryan Cohen's unilateral discretion.

RC can now use GameStop's money to buy stocks of other companies, which may or may not involve any mergers or acquisitions.

What is really interesting and exciting about this, to me, is that it puts "our" money into his hands. It's our money because we are GME investors, and shareholders are the owners of companies, and GameStop's money is part of the shareholder equity that belongs to shareholders.

Ryan Cohen has a vision and a strategy, and access to valuable information, and he does not telegraph his strategy to the competition. We don't know specifically what his intentions are, we don't know specifically what his strategies are.

What we do know is that our interests are in alignment.

We shareholders are in alignment with the RCEO because he is also a (major) shareholder. If RC makes a move that benefits GameStop, it benefits all GME shareholders including himself and us.

If RC takes a strategic investment opportunity, we are all going along for the ride.

This is pretty great, in my opinion, because assuming that you trust RC, it means all a person needs to do is hold GME, and they will get exposure to whatever strategic investments that RC might make. As for me, I trust that RC has a better capability than myself to wisely invest in any non-GME assets.

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[–] [email protected] 6 points 11 months ago (1 children)

I believe it to be entirely possible that the company can become profitable, but nothing is certain. A terrible economic downturn could, for example, possibly make the situation very difficult. Or who knows, any other random spontaneous thing that could change everything.

Yes, GameStop has been shutting down their money-losing stores, and this also means that their revenue is down a little bit too because of that.

Many people perceive GameStop as a dying brick and mortar retail store. Something that might not be immediately clear when looking at GameStop is that, as of June 2021 it is under an entirely new and ambitious leadership team, and so in a certain sense has an entirely new spirit. This leadership team sees that gaming is a huge and growing industry, and that the company "must promptly pivot from a brick-and-mortar mindset to a technology-driven vision".

It was a dying brick and mortar retailer, but it isn't any longer, even though many people still perceive it that way.

The new leadership raised cash and wiped out practically all of the debt. The company to this day carries less than $50 million in debt while having over a billion $ in cash and equivalents.

The new leadership team has been in control of the company for ~ 2.5 years now. Ryan Cohen (CEO and chairman) gave an interview last year, in which he said:

GameStop on the other hand, in many ways – you know Chewy was like a new construction, we built the business from the ground up, knew the business inside and out, GameStop is different. We inherited a bunch of legacy everything, and under-investment across the entire business – people, the entire technology stack, just decades of neglect and so it’s hard to turn around a brick and mortar retailer that’s under the kind of pressure that GameStop was and continues to be under, but that was also part of the attraction going into GameStop was that a transformation the likes of GameStop was was really unprecedented and I was motivated by that and, you know, similarly selling 30 pound bags of of pet food in the mail was also very unpopular and we figured it out so, yeah, I like tough things. I don’t like to make my life easy for whatever reason.

Ryan Cohen also says: "judge me by actions, not my words". At the end of the day, the proof is in the results.

So how long does it take to turn around an old inefficient retail brick and mortar store and turn it into a profitable gaming business and eventually a technology company?

GameStop previously stated earlier in 2023 that they saw a path to full-year profitability.

As of now, in order to achieve full-year profitability, GameStop will need to have a net income of $57 million or greater for Q4 2023, the results of which we will not learn until March 2024. This is a number entirely within the realm of possibility.

If at they achieve full-year profitability it will be undeniable evidence of the success of their turnaround efforts, and it will be a momentous occasion.

[–] [email protected] -3 points 11 months ago (2 children)

Ryan cohen doesn’t need to be brilliant to turn 1 billion into 50 million in profit annually. Video game retail will not make them a profit. But that 50m will negate enough losses to appear profitable. But no one intended to invest a in a retailer that fails to profit from retail, and only profit from cash pulled from a miracle squeeze.

People expected a MOASS years ago. They cheered for nfts and web3. None of those things will ever come to light. Now we are banking on a low return hedge fund. With a dog food twitter troll running the show.

There is zero chance gme makes a profit in store. Or online.

Used games. lol.

Batteries. lol.

Gift cards. lol.

DD means knowing the the downsides. There is no DD in the gme cult.

[–] [email protected] 4 points 11 months ago

This is when you wish Lemmy had a remindme bot haha

[–] [email protected] 4 points 11 months ago

I think you've misunderstood what I said. You asked if I saw how GameStop might be profitable, I provided a very reasonable answer. Anyway, everyone has their own opinion, at the end of the day no opinion really matters, what matters are the cold hard results, which we will see in March 2024.