GameStop announces transition from meme stock to stock picker

Normally, when a company builds up a large cash position and doesn’t have much debt, it uses the money to buy back shares and reward investors. Not GameStop. Instead, the merchant-turned-meme stock announced that it will now allow CEO and chairman Ryan Cohen to invest its $900 million in cash and cash equivalents other companies’ shares.

In an otherwise unwanted earnings release on December 6-it posted a loss of about $3 million for the quarter on revenue of just over $1 billion—GameStop revealed that its board this week approved a new “investment policy” “that allows the company to invest, among other things, in equity securities.” The company did not explain the move further, as it declined to hold an earnings call where analysts typically ask questions about public firms’ financial disclosures.

A video game retailer or a mutual fund?

GameStop became a meme stock during a short press which hit back so hard at the company’s doubters Netflix made a movie about it. It ended up issuing a bunch of new shares that brought in enough cash to leave the company virtually debt-free. That then spent a lot of his new funds on the upgrade of back-end systems and various initiatives that included a gift card partnership last year with cryptocurrency trading firm FTX. The latter was canceled less than two months after its announcement FTX exploded in a pile of bankruptcy paperwork and federal charges.

Wedbush Securities analyst Michael Pachter, who has a bearish “underperform” rating on the stock, sounded annoyed when writing up the latest quarter’s performance (example: “[W]e think that the Street’s previous expectations and our own have become outdated”) and threw up his hands at GameStop’s new revelation.

“Investors have a wealth of investment tools at their disposal and therefore do not need GameStop to act as a mutual fund,” he wrote.

The move probably sounds even less exciting to former employees who were let go during several rounds of layoffs last year, or current employees dealing with GameStop’s. new regime of “extreme frugality”.

GameStop shareholders, meanwhile, seem fine with the plan. Shares of GameStop rose 10% in today’s trading session.