GameStop CEO Ryan Cohen is shopping for a major acquisition of a publicly traded company, according to the Wall Street Journal. An acquisition would put the company’s $8.8 billion in cash and short-term investments, which it accumulated by issuing shares at meme stock valuations, to work.
Cohen has successfully turned around the company’s operations to profitability for the past two quarters by emphasizing collectible sales and ruthlessly cutting stores (see “GameStop Closing Hundreds of Stores”), but has not publicly identified any use for the company’s cash other than “investing” in BitCoin, a strategy that offset some of the company’s profits in the most recent quarter by declining $9.2 million in value (see “GameStop Collectible Sales Boom”).
Cohen identified consumer and retail companies as potential targets, and he appears to be uninterested in companies in the collectibles space, which would seem to be a strategic fit. GameStop did not put in a bid on the Diamond Comic Distributors assets, as far as we know, and the focus on public companies appears to rule out PSA parent Collectors Holdings despite the close ties between the companies: Collectors Holdings CEO Nat Turner sits on the GameStop board and GameStop has what appears to be a successful relationship with PSA for grading (see “GameStop Becomes Authorized PSA Dealer”). Collectors’ valuation also appears to be in the right range, as it raised $100 million on a $4.2 billion valuation in 2022. Among other collectibles options, Funko is public, but a money-losing basket case (see “Funko Sales, Profits in Decline”) and a market cap of less than $250 million.
Cohen’s background is in e-commerce retail: he founded and led Chewy, which was sold to PetSmart in 2018. An active investor in recent years, he currently owns 9% of GameStop stock and has a rich compensation package based on aggressive valuation targets, according to the report. ort.
Source: ICv2
