GameStop was once the go-to destination for video games. Then it was the archetypal “meme stock” in 2021, when a band of Reddit-reading retail investors thwarted hedge funds’ shorts on the company stock, sending the company’s stock skyrocketing. There was even a movie about it. But its eccentric, some would say visionary, is back with a plan that he thinks could rival the wild days of half a decade ago.
Despite that selloff, the company’s CEO Ryan Cohen said in an interview with The Wall Street Journal he’s aiming to turn the $11 billion company into a $100 billion-plus business via an acquisition of a publicly traded company. The billionaire envisions the company extending beyond its standard video game and collectible sales.
“It’s ultimately either going to be genius or totally, totally foolish,” Cohen told The Journal.
In a world where physical video games are swiftly becoming antiquated, the move signals the company’s desire to modernize. The fervor over the company in 2021, which sent the struggling video retailer’s stock up 2,700%, was inspired in part by hedge funds and retail investors’ understanding that the company was growing obsolete. Nevertheless, Cohen believes he can turn that image around and find a buyer willing to pay hundreds of billions for the business.
GameStop did not immediately respond to Fortune’s request for comment.
It’s unclear exactly what company may fit the bill for the acquisition. However, Cohen told The Journal he believes that match could be in the consumer or retail industry. The billionaire has a strong carrot motivating him to fulfill this purchase. Earlier this month, the board of directors announced it had voted to increase Cohen’s pay package to more than $35 billion awarded entirely in stock options—if he is able to increase the company’s market capitalization to $100 billion and achieve $10 billion in Cumulative Performance EBITDA. For context, Cohen has increased the company’s market capitalization from $1.3 billion in 2021 to approximately $9.3 billion, a 615% increase in stockholder value, though a far cry from the $100 billion goal.
What experts think is possible
Michael Pachter, a managing director of equity research at wealth management firm Wedbush Securities, is highly skeptical of Cohen’s ability to fulfill the acquisition. “I might be able to give you a higher than 0.001% probability that it’ll get to $100 billion,” Pachter told Fortune. “But I take the underside of that bet. I’d say no, not going to happen.” Pachter’s doubt is rooted in the fact that Cohen has yet to demonstrate an idea or a unique competitive advantage beyond his company’s cash pile, which was valued at $8.83 billion in October.
The company has struggled to modernize in recent years amid a series of strategic missteps. Last May, GameStop attempted to woo crypto enthusiasts after it said it purchased 4,710 Bitcoins, at the time worth about $500 million, in an attempt to amend the company’s falling profits. The move gave the company’s stock an initial bump but soon tumbled 10% the day after the announcement. And in June, Cohen said in a quarterly investor call the video game retailer would focus on trading card sales, sending the company’s stock tumbling 20%.
“He goes into a business where the physical game model is threatened by the digital download model and he’s just helpless,” Pachter said. “There’s nothing he can do to make that better.”
Cohen is no stranger to large-scale acquisitions. The billionaire first made a name for himself after launching online pet food retailer Chewy, which was acquired by PetSmart for $3.35 billion and went public in 2019 with a valuation over $8 billion. Cohen has also been buying up GameStop stock. He is the company’s biggest individual investor with a stake of over 9%. Though Pachter doubts Cohen can replicate his success.
“It’s easy to say, ‘I’m going to be the next Warren Buffett,’” Pachter said. “But is Ryan Cohen a ‘twice catching-lightning-in-a-bottle’ guy? I don’t know.”
The company stock saw a recent boost after hedge fund investor Michael Burry, best known for his prescient short of the U.S. housing market ahead of the 2008 financial crisis, said he’s been buying shares of GameStop’s stock. Burry has recently invested in the company’s stock, detailing his GameStop stake in a Substack post on Jan. 26, saying he is buying the company’s shares as part of a long-term investment plan.
“I believe in Ryan,” Burry wrote in the post, referring to Cohen. “I like the setup, the governance, the strategy as I see it. I am willing to hold long-term, and I am excited to see where this goes.”