GameStop Rises Strongly On Disclosure Of Talks With Activist Investor
Ailing video game retailer GameStop (NYSE: GME) was certainly not struggling in the market on Tuesday. The company’s shares rose precipitously on news from one of its major shareholders.
In a regulatory filing, RC Ventures, an activist investor who owns a roughly 10% stake in the company, revealed he was in discussions with GameStop management.
The investment firm added, “During these conversations, people reporting [i.e., RC Ventures] expressed their willingness to become more involved with the Company in certain circumstances which, according to the Reporting Persons, are likely to produce the best results for all shareholders. ”
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He did not specify how exactly he intended to deepen his involvement with GameStop. A report in Bloomberg on Tuesday, citing “someone familiar with the matter,” said RC Ventures chief Ryan Cohen wants to position the company as an e-commerce rival to the industry giant, Amazon.com (NASDAQ: AMZN).
In this design, GameStop’s selection would be significantly expanded and deliver faster delivery than Amazon.
Analysts have expressed skepticism about this David (GameStop) versus Goliath (Amazon) strategy. Still, it seems early investors are at least finding some silver lining for their company’s future in these plans, even if some people don’t find them believable – GameStop shares closed up nearly 21%. Tuesday, far exceeding the gains of the broader stock market.
RC Ventures’ stake in GameStop was revealed late last month. The investment firm is a relatively recent arrival on the scene; Cohen is perhaps best known for being the co-founder and CEO of the pet food company now known as soft.
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