GameStop (GME) Stock Rallies as Cohen Drops $10.5 Million on More Shares

TLDR

• Ryan Cohen bought 500,000 GameStop shares on January 20 at an average price of $21.12 per share
• His stake increased to 9.2% of the company, totaling 41,582,626 shares
• GameStop stock climbed 4% in after-hours trading following the purchase announcement
• Cohen has invested approximately $117.4 million of personal funds into GameStop over time
• The board recently granted Cohen a performance-based option for 171.5 million shares

GameStop shares rose 4% in extended trading Tuesday after Chairman Ryan Cohen purchased additional stock. The buy signals continued confidence from the company’s top leader.

GameStop Corp., GME

Cohen acquired 500,000 shares through open market transactions on January 20. He paid between $20.81 and $21.20 per share. The weighted average price totaled $21.12 per share.

The purchase value reached approximately $10.56 million. An SEC filing disclosed the transaction details on Tuesday evening.

Cohen now holds 41,582,626 GameStop shares. That represents roughly 9.2% of outstanding stock. His position includes 37,847,842 directly owned shares and 3,734,784 shares from warrants.

The chairman has invested about $117.4 million of his own money into GameStop over the years. The filing shows his commitment to the video game retailer’s future.

Cohen’s GameStop History

The Chewy founder first bought into GameStop in August 2020. He took a 9% stake during the meme stock surge. GameStop’s board brought him on in 2021.

He became Chairman in June 2021. The company then promoted him to President and CEO in September 2023. Cohen serves in both roles without taking a salary.

GameStop’s market value has grown substantially under his leadership. The company was worth around $1.3 billion when Cohen joined the board. Today’s market cap sits near $9.45 billion.

That represents a gain of over 600%. The stock peaked at a $34 billion valuation during the 2021 meme stock craze. GME shares have declined 23.2% over the past year.

Financial Performance and Incentives

GameStop posted $421.8 million in net income over the most recent four fiscal quarters. The profitability marks a turnaround for the struggling retailer.

The board awarded Cohen a massive stock option grant earlier in January. The performance-based package covers 171.5 million shares at $20.66 per share.

The option could be worth up to $35 billion. However, it only vests if GameStop reaches a $100 billion market cap and $10 billion in cumulative EBITDA.

Cohen’s latest purchase came at prices close to current trading levels. He didn’t wait for a significant dip. This suggests he sees value in GameStop at today’s prices.

The video game retailer faces ongoing challenges in the retail gaming space. Digital downloads continue eating into physical game sales. Cohen has been working to adapt the business model.

Investors responded positively to the share purchase news. The after-hours pop shows market confidence in Cohen’s leadership. His willingness to invest millions of his own money carries weight with shareholders.

Cohen’s total stake now includes shares from multiple sources. The direct holdings make up the bulk of his position. The warrants add another layer to his ownership structure.

The purchase timing comes as GameStop works to maintain its profitability streak. The company has shown it can generate meaningful earnings under Cohen’s direction.

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