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What happened
Actions of GameStop (NYSE: GME) jumped 27% on Tuesday, helping the stock rise sharply this week.
So what
GameStop said on Monday that its board has created a “strategic planning and capital allocation committee” to accelerate its digital transformation. The committee is chaired by Soft (NYSE: WHO) founder and former CEO Ryan Cohen, who is one of GameStop’s biggest shareholders.
GameStop’s share price is skyrocketing again. Image source: Getty Images.
The committee works to strengthen the digital capabilities of GameStop. E-commerce has become a vital segment of the company’s business as sales of traditional game discs have largely given way to digital downloads in recent years.
GameStop has hired several executives to lead its tech-driven initiatives. He is also looking for a new CFO following the resignation of CFO Jim Bell in February.
Now what
GameStop has long sought ways to adapt its operations to changing consumer preferences. Digital game downloads pose an existential threat to its physical retail stores and high-margin used games business, and GameStop has struggled to weather declining sales in these areas.
Cohen joined GameStop’s board of directors in January, with the goal of helping improve the game retailer’s online capabilities. “We are delighted to bring our customer-obsessed mindset and technology experience to GameStop and its strategic assets,” Cohen said in a press release announcing his appointment to the board of directors.
Cohen’s appointment helped spark a short GameStop squeeze that sent its share price up over 15 times before it died out and its shares reversed course. Its success in transforming the retailer into a legitimate e-commerce player will go a long way in determining whether this latest rally in GameStop shares proves to be sustainable.
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