Former activist investor Ryan Cohen has officially been named as GameStop Corp (NYSE:GME)’s new chief executive, replacing former head Matt Furlong, who was ousted in June following a larger-than-expected quarterly loss for the video game retailer.
Following Furlong’s June departure, Cohen took on the role of executive chairman while reducing the board’s headcount from six to five.
Cohen's latest appointment finalises his comprehensive takeover of the high-street chain ever since buying up a controlling stake at the start of the decade.
According to regulatory filings, Cohen does not intend to receive compensation for serving as GameStop’s president, chief executive and chair.
Cohen’s GameStop coup
Cohen, who made billions from the sale of pet supplies store Chewy which he founded in 2011, first muscled in on GameStop by becoming its largest shareholder in 2020 after buying a 10% stake.
Pressed on why he decided to invest in a legacy high-street retailer, when the video games market was turning completely digital, he said: "I invested in GameStop because I thought it was cheap and the intrinsic value of the business was worth more than the price that I paid.
“There was a tremendous amount of scepticism around GameStop and those are the things that I like... looking at things while no one is looking at them."
His gamble paid off in a big way.
Soon after his investment, GameStop found itself at the centre of the infamous r/WallStreetBets short squeeze phenomenon.
Thousands of retail investors organising through the Reddit subchannel placed buys orders on GameStop shares, predominantly through the retail trading platform Robinhood, in order to artificially inflate its market value.
Private equity firms short selling the stock faced large-scale liquidations and the short squeeze progressed.
Feature film Dumb Money, which chronicles the meme stock craze that swept across the global investing community, is currently in cinemas. It features Seth Rogan and Pete Davidson, though neither Cohen nor Furlong is depicted in the film.
Cohen’s credentials lend well to GameStop’s existential problems.
Chewy’s sale to PetSmart (NASDAQ:PETM) for $3.35 billion set a new e-commerce record, while creating a combined brick-and-mortar and online pet-supplies empire.
GameStop will also need to adapt to the digitised nature of video game sales if it is to continue as a going concern.