this post was submitted on 08 Dec 2023

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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 6 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] 17 points 6 months ago

Also, it's pretty funny to me how some financial incumbents find this news to be "alarming". It's alarming to them, it scares them. It scares them because they already decided that GameStop is bad and Ryan Cohen is bad, but now Ryan Cohen has even more concentrated control to support his ability to execute his strategy.

I've now seen on multiple occasions, the sort of FUDdy counter narrative: now Ryan Cohen has the ability to buy assets that aren't GME. If he had any faith in his company, he would simply use that money to do a GME share buyback.

What a giveaway.

These opponents want RC to do a GME share buy back. Almost as if, this would be a strategically poor move for GameStop at this time but a good move for GameStop's opponents. Discussed here is why, as of this time, it would not be a good decision to do a share buyback. The only scenario in which that would actually be a good idea would be if the price of GME tanked very low. Better to hold on to that buyback money as an insurance policy, just in case the share price ever does get tanked. In that case, the waiting cash for the buyback covers the problem.

In the mean time, at current GME prices, there are probably other undervalued opportunities that RC has his sights on, and this is scary to anyone that opposes GameStop's success.

[–] Mojojojo1993 7 points 6 months ago

Was there any indication of interest after towel company blew up ? If cellar boxing is a thing wouldn't the end of towel cause serious ramifications? Also isn't towel being part of the basket theory also something?

My biggest requirement would be everyday things. Would love to pay for my bills through GameStop. If they could do power, insurance, banking, groceries, internet or phone plans. Then I could pay for things I already pay for but also enhancing a company I buy into.

Maybe something like Nvidia GeForce now streaming service or data center would be more up GameStop. Possibilities are endless

[–] talos_the_true_god -1 points 6 months ago (2 children)

Time to buy bed bath and beyond, right guys? /s

[–] vinan 6 points 6 months ago* (last edited 6 months ago)

We can't buy BBBYQ shares, but RC will buy the whole company

[–] [email protected] 4 points 6 months ago

Just like that one time when Burry bought Porsche because it was time to buy VW 💎🤙

[–] Nastybutler -3 points 6 months ago (2 children)

What will you say if he makes bad investments and loses some/most of that cash? I see a lot of similarities between the WSB deification of Cohen and MAGAs deification of Orange Julius Caesar

[–] [email protected] 13 points 6 months ago

Would definitely be unfortunate. At this point, anyone long GameStop has their wagon pretty clearly hitched to Cohen. Even before this investments policy change, Cohen has had the freedom to issue almost 700mil shares into the market and has not done this. Trust is required, so I assume those long GameStop are comfortable with that risk.

[–] [email protected] 8 points 6 months ago

I wonder if the board was as heavily invested in Orange Julius as GameStop's board is.

Ryan Cohen and Larry Cheng keep buying more shares of GameStop and Ryan Cohen is opting to not receive any payment for his role as CEO, as instead his earnings should come from improving the share value.

So I see Ryan Cohen as very much aligned with shareholders and share value, as he has put his money where his mouth is. It gives me a good amount of confidence with how he decides to invest this money.

[–] [email protected] -4 points 6 months ago (1 children)

Nice. Let's see what he does, if anything. Watching the board and chair work when unencumbered, and then evaluating the results helps investors to gauge trust and allocate their capital accordingly.

Show us the plan Mr. Cohen. Enough moving in silence and the dark. I'm ready for bigger plans and bigger moves toward increasingly positive profitability and returns for shareholders here.

[–] [email protected] 9 points 6 months ago (2 children)

I wouldn't expect him to start telegraphing his moves now. It's a big part of his ethos.

His actions speak quite plainly though. Looks like we're on track for a profitable year.

[–] [email protected] 6 points 6 months ago* (last edited 6 months ago) (1 children)

That's fair. It does seem to be part of his ethos and I shouldn't expect a leopard to change its spots. Guess I'm just interested to see more progress.

If it's profitable this quarter, then I'm in favor of the "moving in silence" bit. If it's not profitable I'd prefer more clarity, at least on the plans. If not from him, then from the company or another representative. The crypto/web3 stuff seems to have stalled a bit waiting for more regulatory clarity. But if it's just the calm before the storm of positive moves, then so be it.

[–] [email protected] 6 points 6 months ago

Considering q4 is always their best I'm pretty confident on profitability. Christmas, plus January they get Christmas and kids spending Christmas money all in 1 quarter.

It's a shame about the regulatory delays for the web 3 stuff. But it looks like IMX is on a roll and will finally start having more games next year. I've been waiting on Guild of Guardians myself. Should have been out by end of this year, but I'm ok taking delays instead of a buggy release. Games take so long to develop!!

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

He sure posts a lot for someone who never says anything.

[–] [email protected] 5 points 6 months ago (1 children)

He's averaging at just over 2 tweets per month this year 😂

[–] [email protected] 1 points 6 months ago* (last edited 6 months ago) (1 children)

Posts more than I do.

Says nothing.

Praise RC though. 😂 Baggie brains.

[–] [email protected] 2 points 6 months ago

And you've commented 9 times today on Lemmy, you're almost halfway to beating him just counting today. Congrats! I hope people like what you're saying.

[+] [email protected] -7 points 6 months ago (2 children)

He can invest in VOO like an adult, and you guys might actuall see a return on investments for once in your lives. Congratulations you own part of a hedge fund. A patheticly tiny hedge fund.

[–] [email protected] 7 points 6 months ago (1 children)

look at us! we're doing a capitalism!

[–] [email protected] -4 points 6 months ago (1 children)

Only problem is it’s a minuscule hedge fund with the overheard of thousands of stores that lose money. And the money used in the fund was raised by rubes on Reddit.

[–] [email protected] 4 points 6 months ago (1 children)

That is one way of looking at it. Perspective is subjective. I for one believe in the ongoing GameStop turnaround, and that is one of the reasons I am invested in GME.

[–] [email protected] 0 points 6 months ago* (last edited 6 months ago) (1 children)

So you actually see gamespot making a profit on their video game retail in the next few years?

Is there something they’re doing now, that they were not doing before, aside from shutting down stores, that can make their video game sales surpass their expenses for once in nearly a decade?

[–] [email protected] 6 points 6 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 6 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 6 months ago

This is when you wish Lemmy had a remindme bot haha

[–] [email protected] 4 points 6 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.

[–] [email protected] 4 points 6 months ago

Nobody wants another hedge fund –– we want to update the system so it works for everyone. 💜