GameStop is a gaming icon, and a stubborn one, at that. It has survived countless financial storms over the years, going on a hell of a bull run that inspired its own live-action adaptation just a few years back. But, with a new CEO in tow and the positives of the said stock surge having long waned, the company must now face reality, and its new CEO isn’t afraid to confront it head on.
As per CNBC, the company’s new CEO, Ryan Cohen, recently sent out a doom and gloom memo stressing frugality for the foreseeable future, saying:
Our job is to make sure GameStop is here for decades to come.
Extreme frugality is required. Every expense at the company must be scrutinized under a microscope and all waste eliminated. The company has no use for delegators and money wasters. I expect everyone to treat company money like their own and lead by example.
Mind you, Cohen is putting his money where his mouth is. He isn’t just asking employees to pinch pennies – he’s leading by example. The new CEO noted that he’s “either going down with the ship or turning the company around” as he’ll receive zero payment for his work.
It remains to be seen if Cohen’s leadership is enough to make sure GameStop remains in business.
Before the COVID-19 pandemic and its recent community-infused bull run, GameStop had started losing relevance. The company went on a slippery slope towards irrelevancy in the 2010s as companies pivoted more towards digital games. A majority of developers and publishers aren’t afraid to release their games exclusively on digital platforms these days. This is on top of the incentives given for ordering digital copies over physical ones, such as early access, among others.
The only advantage of physical games now is total ownership, which isn’t saying much when it can add to the clutter in your home. Although, if you spent years collecting physical copies, it does make for quite the statement piece in your room.
Since stepping in as Executive Chairman earlier this year, Cohen has taken over the company’s business strategy, capital allocation, and day-to-day operations. He has also since purchased $10 million worth of GameStop shares, further proving that he’s all-in on helping GameStop, not just survive, but thrive.
It remains to be seen if Cohen’s focus on getting the company’s financials in order by cutting costs over prioritizing the company’s immediate growth will work, but it’s an approach that has proven itself time and time again. If nothing else, investors should view this relatively basic but effective turnaround plan as a positive development for the future of GameStop.
