What happened
Actions of GameStop (NYSE: GME) rose 27% on Tuesday, driving the stock up sharply this week.
And
GameStop said on Monday that its board of directors created a “Strategic Planning and Capital Allocation Committee” to accelerate its digital transformation. The committee is being led by Rubber (NYSE: CHWY) founder and former CEO Ryan Cohen, who is one of GameStop’s largest shareholders.
GameStop’s stock price is skyrocketing again. Image source: Getty Images.
The committee is working to strengthen GameStop’s digital capabilities. E-commerce has become a vital segment of the company’s business, as sales of traditional game discs have given way to digital downloads in recent years.
GameStop hired several executives to lead its technology-focused initiatives. He is also looking for a new chief financial officer after CFO Jim Bell resigned in February.
What now
GameStop has long sought ways to adapt its operations to changing consumer preferences. Digital game downloads pose an existential threat to its physical stores and high-margin used game businesses, and GameStop has struggled to overcome declines in sales in these areas.
Cohen joined GameStop’s board in January, with the aim of helping to improve the online skills of the game retailer. “We are excited to bring our customer-obsessed mindset and technology expertise to GameStop and its strategic assets,” said Cohen in a press release announcing his appointment to the board.
Cohen’s appointment helped trigger a small squeeze at GameStop, which caused its stock price to rise more than 15 times before fading and reversing the course. His success in turning the retailer into a legitimate e-commerce player will go a long way in determining whether this latest rise in GameStop’s shares is sustainable.
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