Nick Zieminski/Reuters
Forget about the absurdly high value of GameStop stock — it has nothing to do with the company, and GameStop leadership has acknowledged as much.
"The market price of our Class A Common Stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control," GameStop leaders admitted in an SEC filing earlier this year.
Before the company's stock price exploded as a so-called "meme stock," GameStop was in a years-long death spiral.
That's because GameStop, like Sam Goody and Tower Records before it, is in the business of selling plastic discs, and more people than ever are buying their games digitally. Just like stores selling music on compact discs went out with the rise of digital music services, and stores selling movies on DVD went out with the rise of digital movie services, GameStop is facing the same problem with gaming.
As a means of staving off oblivion, the ailing games retailer is also undergoing a "transformation" led by Wall Street darling Ryan Cohen — the former CEO of Chewy who is a major GameStop investor and the newly elected chairman of the company's board.
Ben Gilbert/Business Insider
In the last six months, Cohen has led the charge on an initiative to completely replace GameStop's executive suite with senior-level Amazon employees. He's hoping to turn GameStop into the "Amazon of games," just as Chewy did for pet supplies.
So, how's Cohen going to do that? That remains to be seen, and Cohen isn't saying.
"You won't find us talking a big game, making a bunch of lofty promises or telegraphing our strategy to the competition," Cohen told investors on Wednesday at the company's annual shareholder meeting. "We know some people want us to lay out a whole detailed plan today, but that's not going to happen."
However, Cohen previously detailed some of his plans for GameStop in a letter he sent to the board last year — before he was chairman of that same board, and before his plans to "transform" the company had begun.
"GameStop's challenges stem from internal intransigence and an unwillingness to rapidly embrace the digital economy," the letter said. "GameStop needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences — not remain a video game retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem."
While speaking to shareholders on Wednesday, Cohen acknowledged the potential risks in attempting to transform GameStop.
"We have a lot of work in front of us and it will take time," he said. "We're trying to do something that nobody in the retail space has ever done."
Representatives for Cohen declined requests for comment.
Got a tip? Contact Insider senior correspondent Ben Gilbert via email (bgilbert@insider.com), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.
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