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GameStop’s stock price soared Monday as the the struggling video-game retailer revealed that activist investor Ryan Cohen had taken charge of its turnaround.
Shares in the Texas-based chain jumped 11 percent to $153.00 in premarket trading as of 8:35 a.m. after it announced that Cohen was leading a new committee to transform GameStop into an e-commerce business.
The Chewy.com co-founder is viewed as GameStop’s likely savior by some rookie investors on Reddit’s WallStreetBets forum, whose efforts to pump up the company’s stock thrust it into the center of the recent market revolution.
Cohen joined GameStop’s board of directors in January after amassing a 13 percent stake and pressing executives to transform it from an outdated brick-and-mortar retailer into a digitally focused gaming company.
GameStop now appears to have given Cohen the reins to guide that transformation by making him the chair of a three-person “Strategic Planning and Capital Allocation Committee.”
“It is responsible for evaluating areas that include GameStop’s current operational objectives, capital structure and allocation priorities, digital capabilities, organizational footprint, and personnel,” the company said in a news release.
The panel has hired executives to oversee GameStop’s e-commerce fulfillment and customer care operations and is also searching for a new chief financial officer with e-commerce and technology experience to replace outgoing CFO James Bell, who is leaving at the end of the month, the company said.
The committee is also looking for ways to “transform GameStop into a technology business and help create enduring value for stockholders,” according to the news release.
That was the focus of a November letter Cohen sent GameStop’s board, which said the chain had failed to keep up with the industry’s “transition from physical hardware to digital streaming.”
Cohen effectively lit the fuse for GameStop’s explosive rally that sent its share price as high as $483 in late January.
His view that the chain was primed for a turnaround led amateur traders on Reddit to buy the company’s stock left and right before they went to war with institutional investors who bet against it.
Cohen appeared to set off another surge in late February with a cryptic Twitter post featuring a photo of a McDonald’s ice cream cone, which spurred wild speculation about what it could mean for GameStop.
Twitter users also tried to decipher another bizarre post Cohen made last week with what appeared to be a screenshot from an ad for Pets.com, the online pet supply retailer that was a precursor to Chewy.
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