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GameStop Stock: Understanding The Ryan Cohen Factor

GameStop chairman Ryan Cohen, known as “Papa Cohen” by many GME stock holders, has been pushing to reshape the company. Wall Street Memes takes a closer look at the Ryan Cohen factor.

Admired by the majority of GameStop stock  (GME) - Get GameStop Corp. Class A Report investors, Chairman of the Board Ryan Cohen is an audacious young capitalist who promises to reinvent the video game retailer. Armed with bold plans and an activist mindset, the Chairman is seen as one key piece in the company’s turnaround efforts.

Today, Wall Street Memes discusses the importance of Chairman Cohen to GME stock investors.

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Ryan’s background

36-year-old Ryan Cohen was the CEO of Chewy, the pet e-commerce company that he founded when he was only 25 years old. In 2017, he sold Chewy to PetSmart in a $3.3 billion deal for the purpose of pursuing other personal goals.

Then, the investor side of Ryan Cohen’s began to gain notoriety. After the sale of Chewy, he invested a large sum in Apple and became the company's largest individual investor, holding around 6 million split-adjusted shares.

By the end of 2020, Cohen had also become the largest single shareholder in GameStop, having acquired 10% of GME's shares and subsequently increasing the ownership percentage to about 13%. These investments were made before the short squeeze of GameStop stock, in late January 2021. Around the same time, the investor was appointed as Charmain of the Board.

Cohen’s revolution

Upon taking over as chairman in early 2021, Cohen had already seen his initial investment in GME rise by more than 2,500%. With a bold and defiant speech, he opposed the board members' idea to issue $100 million in equity due to concerns over the value of GME stock.

Mr. Cohen proposed a series of changes to the company's strategy. He encouraged investments beyond brick-and-mortar stores, accelerating e-commerce penetration, expanding product categories, and aiming for a high-quality customer service model.

Also, the chairman helped to change the company's team of executives, cutting a few loose and hiring former Chewy and Amazon employees for senior managerial positions.

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How Ryan Cohen matters for the stock

GameStop has been reporting annual losses for the last three consecutive years (see chart below). Under the previous management team, the company began to suffer from the secular trends that favor the digital channel over brick-and-mortar stores. The COVID-19 crisis only served to worsen GameStop’s competitive position.

Figure 2: GameStop’s net income chart in the last 5 years.

Figure 2: GameStop’s net income chart in the last 5 years.

Ryan Cohen was one of the few billionaire investors who understood how Reddit forums worked even before the meme stock boom of January 2021. He saw in GME an investment opportunity that combined potential for future financial performance with the stock's popularity among individual investors.

It did not take long for prominent and vocal retail investors to see “Papa Cohen” as one of their representatives and allies inside the company.

Wall Street Meme’s take

One of the appeals of GameStop stock to retail investors is Ryan Cohen’s influence and unconventional vision as a chairman. In addition, Mr. Cohen has a proven track record in what GameStop probably needs the most right now: e.g. growth in e-commerce and startup-like momentum.

GameStop’s fundamentals and growth prospects are far from being pristine at this moment. Yet, Ryan Cohen may very well be a bullish factor that keeps GME investors hopeful about another leg higher in the company’s share price.

Twitter speaks

GameStop’s Chairman Ryan Cohen is seen as one key piece in the company’s turnaround efforts. How do you believe that “the Ryan Cohen factor” will be reflected on the stock?

(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)