GameStop’s Curious Case

Now, GameStop. A most peculiar establishment. For years, it peddled plastic rectangles containing fantastical adventures, but those days, alas, are fading faster than a ghost in sunshine. This company, you see, was once the king of the video-game castle, but now it’s rather like an old, slightly mildewy throne. And then along came Ryan Cohen, a fellow with a glint in his eye and a rather large pile of money, and things got…interesting.

Mr. Cohen, you understand, isn’t just any businessman. He’s the chap who built Chewy, a delightful enterprise that sends mountains of dog biscuits directly to your doorstep. A clever fellow, indeed. But getting involved with GameStop was a bit like rescuing a grumpy badger – a noble gesture, perhaps, but fraught with peril. He became the Big Cheese in late 2023, tasked with turning this wobbly enterprise around.

Recently, the scribes at the Securities and Exchange Commission revealed that Mr. Cohen had scooped up a whopping 500,000 GameStop shares. That’s a lot of shares, enough to fill a rather large biscuit tin! At approximately $21.12 a pop, it amounted to over $10.5 million. He now owns a substantial slice of the pie – over 9%, if you’re counting. Now, when someone shovels that much money into a company, it usually means they reckon it’s got a glimmer of hope. Or perhaps they just enjoy collecting wobbly enterprises. One never quite knows with these chaps.

Is GameStop sprouting wings?

Since becoming the Head Honcho, Mr. Cohen has been trying all sorts of tricks to liven things up. He’s dabbled in collectibles – little plastic figurines and shiny cards – and even started hoarding digital gold, known as Bitcoin. A curious habit, that. It’s like a squirrel burying nuts, only the nuts are made of computer code. The stock itself, however, hasn’t exactly been soaring. It’s down about 21% over the past year – a bit like a deflated balloon.

The business of selling the actual gaming machines – the consoles, you see – is shrinking, a decline of about 5%. The software, those little cartridges, is practically vanishing. But the collectibles? Ah, now those are booming! A whopping 55% increase! Apparently, people are still quite fond of miniature dragons and collectible cards. Go figure.

Mr. Cohen has also been trimming the fat, closing down shops, and selling off bits and bobs. It’s like a giant clearing out its attic. And it’s worked, to some extent. They’ve managed to increase their operating cash flow and generated a modest profit – 67 cents per share. Not a fortune, mind you, but a definite improvement.

So, the financial picture is…less gloomy than it once was. The hardware isn’t collapsing, the software is leaking, and the collectibles are showing a bit of sparkle. The question now is whether this sparkle can turn into a proper blaze. Investors will be tasked with determining if, and when, this company can start growing again.

According to the scribes at Yahoo! Finance, only one analyst bothers to follow GameStop. This analyst predicts nearly $1 of earnings per share in 2026 and total revenue of $4.16 billion. With a market cap of $9.7 billion, that means GameStop is trading at about 2.3 times revenue and close to 22 times forward earnings. Now, that’s a rather rich price to pay for a company that’s still trying to figure out its future, wouldn’t you agree?

They can probably continue to cut costs, squeezing pennies until the pips squeak. But the earnings multiple feels a bit…optimistic. The situation has improved, certainly, but I’m still giving this one a wide berth for now. It’s a curious case, to be sure, but I prefer my investments a bit less…peculiar.

2026-01-25 04:12

Is GameStop sprouting wings?

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