We’re talking about billions of dollars here. Things may have gotten a little out of hand for the management of the popular gaming store chain.
GameStop is reportedly closing hundreds of stores in the United States. At least 410 closures have been confirmed, and there are rumors of 11 more, though these have not yet been confirmed. This is just the latest wave of closures for the Grapevine, Texas-based retailer. In its annual 10-K SEC filing released in February, the company stated: “We have initiated a comprehensive review of our store portfolio, which involves identifying stores for closure based on various factors, including an evaluation of current market conditions and individual store performance.” This review resulted in the closure of 590 stores in the United States in fiscal 2024. While this review is ongoing and a specific set of stores has not been identified for closure, we anticipate closing a significant number of additional stores in fiscal 2025.”
The laid-off employees are understandably angry, especially since the latest round of layoffs came shortly after an SEC filing on Wednesday, January 7. In that filing, GameStop announced that it was granting its current CEO, Ryan Cohen, a massive performance-based stock option. Cohen took over the position on September 28, 2023. He is the largest individual shareholder and could earn up to $35 billion, provided that the company’s market capitalization grows to $100 billion and it achieves cumulative performance EBITDA of $10 billion.
With a market capitalization of $9.51 billion at yesterday’s close, GameStop would need to achieve a tenfold increase to give Cohen his full bonus. There is a precedent for this, of course. In January 2021, a short squeeze caused the company’s share price to rise significantly. On January 28, it briefly reached a staggering preliminary market value of $500, nearly thirty times the valuation of the shares at the beginning of the month. However, the market capitalization ultimately only reached $33.7 billion, far short of the $100 billion threshold required for Cohen’s bonus. Given the ongoing shift toward digital gaming, it’s hard to imagine how the company could reach such a high value.
GameStop is reorganizing its operations in other countries. The company has sold its Italian business, closed its stores in Germany, Ireland, Switzerland, and Austria, and announced its intention to sell its Canadian subsidiary. According to RNZ, GameStop may close its New Zealand stores (it has 38), although this proposal is not final.
Source: WCCFTech, GameStop Closing List, SEC, SEC, RNZ
