what happened
Retailers on Reddit’s WallStreetBets forum caused a stir at the end of January, a riot that ended in a well-publicized congressional hearing. But that was not the end of the story, and GameStop (NYSE: GME) the stock is up again, up more than 450% in the past month.
Recently, a second run in the stock that started this week continues today, with shares up another 14% at 10:00 EST.
Approximately
The revival comes as some underlying business news combines with the retail momentum. Earlier this week, GameStop announced that it has set up a new “Strategic Planning and Capital Allocation Committee” led by Ryan Cohen. Investors may recall that Cohen was the spark that sparked the initial short-term pressure on GameStop shares.
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The business that has been hampered by hedge funds in the growing world of e-commerce, Cohen added to his board in January. Cohen is the co-founder of, and then successfully sold, an online pet retailer Tough (NYSE: CHWY). WallStreetBets fans believed he could turn the struggling brick-and-mortar GameStop business into an online force in the sale of video games.
Now what
The new committee aims to turn GameStop into a ‘technology enterprise’. It will explore different ways to expand digital channels and adapt the current organizational structure. The question for investors is whether the Reddit crowd has put the stock in a bubble with its excitement, or whether the business can actually grow online to meet the valuation.
Investors will have to incur more when the company reports its fourth-quarter earnings and fiscal 2020 after the market closed on March 23rd.
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