With this plan, GameStop wants to create the turnaround

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GameStop with outdated business model
New management is working on the company’s transformation
cost savings required

The showdown between professional short sellers and organized retail investors in January 2021 should still be fresh in the minds of most investors. As part of this short-selling war, many private small investors mobilized via Reddit and other Internet forums and drove up the prices of heavily shortened stocks, such as the US video game retailer GameStop, with concerted purchases. In doing so, they caused high losses to the point of almost ruin for some hedge funds, which, on the other hand, were speculating on falling prices and were therefore caught on the wrong foot.

change of strategy

But GameStop has actually been in crisis for a long time, and that’s because stationary retail hasn’t just flourished since the Corona pandemic. Under its new management, the US company now wants to say goodbye to the outdated and ailing business model of a classic retail chain for computer games and become a modern technology provider for online gamers. This transformation from a chain of stores to a technology company with a focus on e-commerce was initiated by activist investor Ryan Cohen, who invested in the ailing company long before small investors discovered the stock on Reddit forums.

turnaround plan

However, according to TheStreet, the company has so far released few details about its turnaround plan. However, it is clear that management has realigned its focus and is now investing heavily in technology, warehousing and supply chain infrastructure. In addition, an e-commerce business has been set up and the new blockchain division has brought new digital products onto the market.

However, GameStop is also striving to reduce its high operating costs. Because the company is currently burning around 300 million US dollars in cash per quarter – a development that must be stopped, otherwise the innovations planned as part of the transformation could not be financed. The measures taken as a result include one significant one downsizing.

owner mentality

In order for GameStop to be successful with fewer staff, Ryan Cohen wants to establish an “intensive owner mentality”. The Board of Directors is intended to serve as a model for this, so members are now rewarded solely in the form of share awards. In fact, Ryan Cohen, as Chairman of the Board, is waiving all compensation. The aim of the owner mentality is to ensure that employees have an enormous incentive to contribute to the success of GameStop.

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