GameStop needs to amass a publicly traded client firm that is far bigger than the online game retailer in a deal that could possibly be “transformational” for the corporate, CEO Ryan Cohen advised CNBC in an interview Friday.
“It is gonna be actually large. Actually large. Very, very, very large,” Cohen mentioned of the scale of the acquisition. “It is transformational. Not only for GameStop, however in the end, throughout the capital markets … that is one thing that actually has by no means been carried out 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, “prime quality, sturdy, scalable with development 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 a whole bunch of billions of {dollars}.”
“If it really works, it is genius. If it does not work, then, you recognize, it is going to be completely, completely silly,” Cohen, the co-founder and former CEO of Chewy, acknowledged. “However I imagine we now have the parts to make it work, and I am very assured within the capability to make the asset a lot, a lot, far 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 job 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 individual mentioned. “Except you are speaking about radically reworking a enterprise mannequin or one thing, it simply does not occur in retail.”
One other agreed.
“It is easy to say one thing,” the individual mentioned. “It is so much more durable to do it.”
GameStop’s ambitions to balloon in measurement first got here to gentle 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 properly.
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, at the same time as 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 proportion factors and web revenue 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 turned well-known after betting in opposition to the U.S. housing market forward of the monetary disaster — who just lately disclosed that he is been shopping for shares.
“Ryan is making lemonade out of lemons,” Burry mentioned in a Monday Substack submit. “He has a crappy enterprise, and he’s milking it finest he can whereas benefiting from the meme inventory phenomenon to boost money and watch for a possibility to make an enormous purchase of an actual rising money cow enterprise.”
Over the past 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 put money into 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 known as his new technique “far more compelling than bitcoin.”
“It is much 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 are able to 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 underneath optimized asset, after which ultimately we may transfer on to the subsequent one, however, you recognize, we’ll see what occurs.”
