Summary List Placement
What does Ryan Cohen want with GameStop?
That’s the big, unanswered question at the heart of his 12.9% ownership stake in the company — an investment he made well before GameStop became a meme stock.
Cohen, who cofounded Chewy and acted as CEO before it sold to PetSmart for $3.35 billion in 2017, does not have a background in the video game industry. His claim to fame is outfoxing Amazon at its own game — e-commerce — in a specific category: pets. That’s an especially meaningful claim to fame when it comes to Wall Street, which saw Cohen’s involvement in the company as a reason to buy the ailing retailer’s stock before Reddit found it.
Read more: Ryan Cohen made millions when Chewy got acquired. Now the millennial entrepreneur has a plan to turn around GameStop.
But Cohen is no casual investor in GameStop — he’s a member of the board, and an activist investor who has successfully lobbied the company to follow his advice several times thus far. He is clearly in this for the long term.
Though the lingering question of “Why GameStop?” remains unanswered, we know a lot about Cohen’s plans for the future of the company.
1. Cohen wants GameStop to become a technology company, with a focus on ecommerce over brick-and-retail stores.
Cohen’s investment firm, RC Ventures, owns 12.9% of GameStop. That stake makes it the second-largest single shareholder of GameStop.
Those shares cost tens of millions of dollars, and they put Cohen in a position to more directly engage with the company’s leadership. But those private conversations apparently didn’t go very well.
“Given that our attempts to privately engage with you since the summer have yielded little progress, we feel compelled to send a clear message to the Board today,” Cohen wrote in an open letter aimed at GameStop’s board of directors published in November 2020.
“GameStop’s leadership should immediately conduct a strategic review of the business,” he said, “and share a credible plan for seizing the tremendous opportunities in the rapidly-growing gaming sector.”
The letter, overwhelmingly, focused on the company’s need to transition to ecommerce.
“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.”
2. He wants to reshape the company’s leadership, and has already begun doing just that.
Throughout his letter, Cohen directly criticizes the company’s leadership — both its executive suite and its board of directors, to whom the letter is addressed.
GameStop CEO and board member George Sherman, “appears committed to a twentieth-century focus on physical stores and walk-in sales, despite the transition to an always-on digital world,” Cohen said, and the board lacks “the type of strategic vision” necessary for GameStop, “to pivot toward becoming a technology-driven business that excels in the gaming and digital experience worlds.”
That criticism appeared to have a major impact, as GameStop announced in early January that Cohen and two of his former Chewy lieutenants would become new members of the board. Pending a vote in June, the trio will make up one-third of the board’s membership.
Soon after Cohen joined the board, major c-suite changes began.
Amazon vet Matt Francis was hired on as the CTO in early February. A former Amazon Web Services engineering lead, he’s tasked with, “overseeing e-commerce and technology functions” for GameStop.
Then, in late February, CFO Jim Bell was suddenly forced out of his role at the company. The board of directors “lost faith” in Bell, according to a person familiar with the decision who spoke with Insider.
3. Cohen is in charge of a newly announced committee that intends to “transform” the company.
Just this week, GameStop announced that Cohen is in charge of a new committee at the company that intends to, “identify initiatives that can further accelerate the company’s transformation.”
The “Strategic Planning and Capital Allocation Committee” is tasked with “identifying actions that can transform GameStop into a technology business and help create enduring value for stockholders,” GameStop said in a press release on March 8.
If that language sounds familiar, that’s because it’s very similar to the language used by Cohen in his letter to the board last November.
The group — which includes Cohen, former Chewy exec Alan Attal, and activist investor Kurt Wolf — was seemingly created to carry out the changes proposed by Cohen last year.
4. One potential for GameStop’s future: online trade-ins.
In September 2020, when Cohen initially purchased a significant chunk of the company’s shares, he privately proposed a plan to the board to focus GameStop on e-commerce opportunities.
One example of those opportunities is tied to GameStop’s core business: reselling used games.
Cohen reportedly proposed an online version of the retailer’s (in)famous game trade-in program.
During those talks, he proposed a major expansion of GameStop’s online footprint, according to Bloomberg. Beyond just games, GameStop’s online store would offer “a wide range of merchandise,” the report said, and prioritize fast shipping.
Cohen has yet to publicly spell out his specific plans, and his representative didn’t respond to a request for comment as of publishing.
Got a tip? Contact Insider senior correspondent Ben Gilbert via email (firstname.lastname@example.org), or Twitter DM (@realbengilbert). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by email only, please.