GameStop needs to accumulate a publicly traded client firm that is far bigger than the online game retailer in a deal that may very well be “transformational” for the corporate, CEO Ryan Cohen instructed CNBC in an interview Friday.
“It is gonna be actually massive. Actually massive. Very, very, very massive,” Cohen mentioned of the scale of the acquisition. “It is transformational. Not only for GameStop, however finally, throughout the capital markets … that is one thing that basically has by no means been finished earlier than throughout the historical past of the capital markets.”
Cohen declined to call the corporate’s targets – saying solely he is searching for a publicly traded client firm that is undervalued, “top quality, sturdy, scalable with progress prospects” and has a “sleepy administration group” behind the wheel. He claimed if the funding pans out, it has the “potential to make [GameStop] value a number of tons of of billions of {dollars}.”
“If it really works, it is genius. If it would not work, then, , will probably be completely, completely silly,” Cohen, the co-founder and former CEO of Chewy, acknowledged. “However I consider we now have the elements to make it work, and I am very assured within the potential to make the asset a lot, a lot, rather more environment friendly … we have got the governance construction, we have got the capital, we now have the operational experience.”
Whereas Cohen has reworked GameStop from a dying legacy retailer right into a cash making enterprise, it is unclear how an acquisition within the client area may improve its value to over $100 billion – a herculean process for a enterprise with a $10.5 billion market cap.
One funding banker within the client and retail area was skeptical Cohen may pull it off, saying there are only a few companies within the sector that might improve GameStop’s worth so dramatically.
“I’ve by no means seen it,” the particular person mentioned. “Until you are speaking about radically reworking a enterprise mannequin or one thing, it simply would not occur in retail.”
One other agreed.
“It is easy to say one thing,” the particular person mentioned. “It is quite a bit more durable to do it.”
GameStop’s ambitions to balloon in measurement first got here to mild in early January. The corporate unveiled a brand new, all-or-nothing fairness incentive for Cohen that can solely pay out if it reaches a market cap of $100 billion and sees $10 billion in cumulative earnings earlier than curiosity, taxes, depreciation and amortization.
If GameStop’s acquisition plans succeed and its market worth hits $100 billion or extra, Cohen will get his payday — however he mentioned he hopes “all shareholders do” as effectively.
Since taking up as GameStop’s CEO in September 2023, Cohen has dramatically reduce prices, improved the retailer’s profitability and grown its collectibles enterprise, whilst general gross sales have sagged.
Between GameStop’s fiscal 2023 third quarter, when Cohen took over, and its fiscal 2025 third quarter, its most up-to-date quarter, GameStop’s gross margin has grown by 7 share factors and web earnings has climbed to $77.1 million, up from a lack of $3.1 million. In fiscal 2024 and 2025, the retailer posted consecutive annual web incomes following 5 straight years of losses.
The corporate’s success has attracted curiosity from Michael Burry — the investor who grew to become well-known after betting towards the U.S. housing market forward of the monetary disaster — who not too long ago disclosed that he is been shopping for shares.
“Ryan is making lemonade out of lemons,” Burry mentioned in a Monday Substack put up. “He has a crappy enterprise, and he’s milking it finest he can whereas profiting from the meme inventory phenomenon to boost money and look forward to a possibility to make a giant purchase of an actual rising money cow enterprise.”
During the last two years, GameStop has additionally amassed a greater than $9 billion money pile between money readily available and marketable securities – cash the corporate had been utilizing to spend money on bitcoin.
When requested if GameStop will liquidate its bitcoin holdings to assist fund its acquisition plans, Cohen mentioned he was “not ready to say,” however referred to as his new technique “far more compelling than bitcoin.”
“It is just like Berkshire Hathaway, besides what Berkshire did in a long time we’re trying to do in a a lot shorter time when it comes to creating that a lot worth,” mentioned Cohen. “We will go in there and apply the Chewy and [GameStop] mindset of like brutal effectivity and improve the profitability of the corporate very, in a short time and so we may seize much more worth by specializing in this below optimized asset, after which finally we may transfer on to the subsequent one, however, , we’ll see what occurs.”
