GameStop: A Speculative Geometry

The matter of GameStop, a mercantile entity once devoted to the exchange of digital amusements, presents itself not as a simple accounting of profit and loss, but as a curious exercise in speculative geometry. One perceives, within the company’s recent pronouncements, echoes of the Library of Babel, a universe of possible combinations, where the meaning, if any, resides not in the individual volume, but in the infinite potential of the collection. The current arrangement – a performance-based award for its Chief Executive, Ryan Cohen – is a particularly intriguing theorem.

It is said – though the provenance of this claim is lost within the archives of the Buenos Aires Society of Economic Heresies – that all markets are, at their core, attempts to predict the future, to map the labyrinthine corridors of possibility. Cohen, it seems, is offered a key – a substantial allocation of stock options, some 171.5 million shares, predicated on the achievement of certain financial milestones. A sum exceeding $3.5 billion initially, escalating to a figure surpassing $35 billion should GameStop attain an EBITDA of $10 billion and a market capitalization of $100 billion. A rather ambitious cartography, one might observe.

The initial conditions are, shall we say, not entirely unfavorable. Through the first ten months of 2025, the company generated approximately $136 million in EBITDA, while its market capitalization hovered around $10.3 billion. A mere fragment of the desired totality, yet a starting point, a single tile in a vast, unfolding mosaic. The first tranche of Cohen’s award, 10% of the total, vests upon reaching a $20 billion market cap and $2 billion in EBITDA. Shareholders will vote on this proposition in March or April, a ritualistic affirmation of the parameters of this peculiar game.

GameStop’s evolution is, in itself, a study in adaptation. The shrinking of its brick-and-mortar presence – a deliberate dismantling of a once-dominant infrastructure – and the growth of its collectibles business – now accounting for nearly 28% of total revenue – suggest a pragmatic recalibration. However, the decline in software sales and the ongoing erosion of hardware revenue present a countervailing force, a shadow cast upon this nascent prosperity. The company has, undeniably, improved its operating cash flow and earnings, but the trajectory remains uncertain.

Cohen, it is conceded, possesses a certain acumen. His ownership of over 9% of outstanding shares further aligns his interests with those of the shareholders – a rather obvious, yet frequently overlooked, principle. However, the current valuation – approximately 27 times annualized 2025 earnings – appears, to this observer, somewhat… exuberant. A multiple justified, perhaps, by the persistent “meme magic” that clings to GameStop, a spectral residue of past volatility, but scarcely by fundamental analysis.

One is reminded of the Aleph, Borges’s imagined point containing all other points. GameStop, in its current state, is not quite the Aleph, but a distorted reflection of it – a fragmented, incomplete, and ultimately unknowable entity. To invest now, from a purely rational perspective, seems a precarious undertaking. The potential for reward exists, certainly, but it is contingent upon a series of improbable events, a cascade of favorable circumstances that may never materialize. The game, it seems, is afoot, but the outcome remains shrouded in the mists of probability.

2026-01-27 14:22

Read More