Cohen is a celebrity among GameStop stock enthusiasts. So his recent purchase has led GameStop "apes" to pile in, driving up GME's price again.
Let's take a look at Cohen and how he affects GameStop's stock.
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The Model Ape
Cohen is GameStop's largest shareholder. Through his holding company, RC Ventures, he owns more than 12% of GME shares. That's about 9.1 million shares purchased since August 2020.
However, his most recent purchase of 100,000 shares on March 22 valued GME between $96.81 and $108.82 per share. That's much higher than when Cohen bought most of his position in August 2020, when shares cost $5.13 to $6.64, and December 2020, when they cost $13.80 to $16.02.
On Reddit, GameStop "apes" (retail investors super-bullish on GME) have urged each other to buy shares and hold on, no matter what happens to the stock.
Perhaps Cohen is their perfect role model. He hasn't sold a single share, even when the stock surged more than 2,000%. And he has bought GameStop shares even though its valuation isn't based on the company's fundamentals.
It's no wonder that “Papa Cohen” is so well known and cherished among the apes. His opinion dictates sentiment among GameStop stockholders. And that has a positive effect on the stock price.
How Cohen Got to Be GameStop Chair
Not content with only being GameStop's largest shareholder, Cohen as an activist shareholder has quickly ascended the company's board to become its chairman. Perhaps seeing his positive effect on GME gave him the confidence to challenge the company's management and grab a leadership position.
In November 2020, Cohen sent a letter to then-CEO George Sherman stating that GameStop was too slow to transition to online retail. And the following month, he pushed GameStop's board not to proceed with a proposed sale of $100 million in new shares. This would have been catastrophic for GME's price.
GameStop decided not to make more shares. And in June 2021, after the departure of Sherman and when GME was peaking at close to $250 per share, Cohen was appointed chair of the company's board. It began a new era for GameStop.
Since then, a series of initiatives and proposals to modernize GameStop's business — from a new management team with an e-commerce background to customer experience initiatives, to even penetrating new markets such as NFT and crypto — have been quietly carried out according to Ryan Cohen's plans.
How Far Can GameStop Shares Go?
GameStop apes are basically targeting the moon. The stock's price is based largely on the sentiment of the online ape community. Part of their optimism has been due to Cohen's winning track record.
Momentum alone may prove to be the main force behind GME's recent rally and, possibly, the eventual next ones, given the stock's current popularity on Reddit forums and other social media.
Ape investors will continue to pile into GME as long as short sellers keep betting against GameStop's stock. Currently, there's a high level of short interest in GameStop (25% of its float), which leaves room for a potential new short squeeze in the near future.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)