GameStop (GME:NYSE) rocketed more than 40% higher in overnight trading on Wall Street as investors piled in for a fourth day straight.
The headline grabbing Texas-headquartered business saw its stock jump to $194.50, making it a 65% gain since 2 March as investors found themselves lured in by the firm’s transformation into a digital gaming business.
The company has previously relied on selling out of hundreds of stores across the US. But at the peak of the recent retail investor buying frenzy GameStop laid out plans which it hopes will transform the company into a technology business and help create enduring value for stockholders.
GameStop has set up a committee to assess all areas of the business, including operational objectives, capital structure, priorities, digital capabilities, organizational footprint and personnel.
In January, GameStop shares spiked after the retailer was targeted for a short squeeze by the ‘Wallstreetbets’ Reddit forum, whose sights were trained on hedge funds betting on further declines for the share price.
As the shares stormed higher, several platforms including Robinhood controversially introduced temporary trading restrictions on this and other Wallstreetbets targets like cinema operator AMC Entertainment and Blackberry.
E-COMMERCE PIVOT
On Monday, shares in the Fortune 500 company climbed to their highest levels since January on the news shareholder Ryan Cohen is chairing a new committee which will help the brick and mortar retailer pivot to e-commerce.
Cohen, who joined the board right before the Reddit-inspired trading frenzy, is the co-founder of online pet food-to-pet treats portal Chewy.com and has been pressing the company to shift from traditional retail to digital at a time when gamers increasingly purchase titles via digital downloads.
Besides Cohen, the committee is comprised of another former Chewy executive, Alan Attal and Kurt Wolf, another activist GameStop investor.
In addition, the GameStop board is appointing a chief technology officer and two new executives to lead the company’s customer care and e-commerce fulfilment functions, respectively, and there is also a plan to replace Jim Bell, who was ousted as chief financial officer (CFO) last month.
As Neil Wilson, chief market analyst for Markets.com, explained: ‘Whilst the ousting of the CFO Jim Bell last month indicated that something was afoot, an update from the company filled in some blanks and underlined that Chewy’s Ryan Cohen is taking charge of this ship.’
