The retailer-turned-meme-stock recently announced that it will allow CEO and chairman Ryan Cohen to invest its $900 million in cash and cash equivalents in other companies’ stocks. The decision does not seem to go well with the company’s investors.
GameStop disclosed that its board had approved a new “investment policy” this week “that permits the Company to invest in equity securities, among other investments.” The company refused to explain the move further. It has declined to hold an earnings call where analysts typically ask questions about public firms’ financial disclosures.
The title of a research note by Wedbush analyst Michael Pachter read, “GameStop’s Board Makes the Most Inane Decision We Have Ever Seen”. Pachter pointed out that allowing Cohen to invest the company’s money elsewhere instead of deploying its capital on more traditional GME stock buybacks is unnecessary and speaks to the board’s possible lack of faith in GameStop’s future.
The board also expanded its investment policy to allow Cohen to invest GameStop’s money in stocks and bonds. This new arrangement makes Cohen the company’s chief investment officer that sells video games and systems. Cohen is a social-media-savvy, thirty-something Canadian entrepreneur-turned-investor. Wall Street has not applauded the decision.
This event has turned the company into a meme. The company behind the original meme stock disclosed in its quarterly earnings filing last week. It was when the board of directors granted its Chairman, Ryan Cohen, the authority to manage GameStop’s investment portfolio.
The move probably sounds even less exciting to former employees. They were let go during multiple rounds of layoffs last year. Even current employees dealing with GameStop’s new regime of “extreme frugality,” are not quite confident too.
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