Technology

GameStop shares soar on holiday sales, new board members

GameStop’s stock is on a multi-day winning streak.

After surging 58 percent to close at $31.45 on Wednesday, shares of the video-game retailer are up by more than 8 percent in early trading on Thursday after the company reported strong holiday sales and added three activist investors to its board.

Changes have been coming fast at the Grapevine, Texas-based company, which had shaken up the board earlier last year after the company reported one of the worst holiday seasons in a decade, with sales declining by 25 percent.

Since then, Chewy.com founder Ryan Cohen took a 9-percent stake in GameStop in August buoying investors’ confidence in the 37-year-old retail chain. 

This week, Cohen’s investment firm RC Ventures struck an agreement with GameStop to add three new members — Cohen and two other former Chewy.com executives — to the 10-member board.

The new directors bring “deep expertise in e-commerce, online marketing, finance and strategic planning to GameStop,” the company said in a statement.

“People took the board changes seriously,” said Wedbush analyst Michael Pachter, and they “are giving Ryan Cohen a lot of credit for the potential to expand GameStop’s market via ecommerce.”

But the stars have already been aligning for the company with the debut of three new gaming consoles from Nintendo, Microsoft and Sony this holiday season, which contributed to a 4.8 percent increase in comparable store sales in November and December and “unprecedented demand,” the company said.

This demand is expected to “drive sales well into 2021” the company added.

The company’s ability to capitalize on the consoles is only enhanced by the expertise of the new directors, Jefferies analyst Stephanie Wissink wrote in a research note.

“The timing allows [GameStop] to make big, bold moves under the cover of a robust next-gen console cycle launch,” Wissink wrote, “where demand continues to outstrip supply and will likely do so through 2021.”

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