How Chewy co-founder — and South Florida man — Ryan Cohen drove GameStop’s stock skyward
At the heart of the astonishing rise in the share price of GameStop this week lies a familiar face to much of South Florida’s business community.
Wall Street analysts say the appointment of Ryan Cohen, the co-founder of Dania-based online pet store Chewy, to Texas-based GameStop’s board of directors Jan. 11 was a key element in sending the game retailer’s share price from about $21 at the end of 2020 to a closing price of $347.51 Wednesday. Bloomberg News reported this week that Camilla Yanushevsky, senior equity analyst at independent investment research group CFRA Research, said Cohen’s appointment helped push day traders to initiate a so-called “short squeeze” of hedge funds who had been betting that GameStop’s share price would instead fall.
In an email, Cohen told the Miami Herald, “As you can imagine, I can’t comment at this time,” without elaborating. Cohen may be under Securities and Exchange Commission quiet-period rules given his recent board appointment.
Cohen’s board appointment — along with the appointments of fellow Chewy co-founder Alan Attal and former Chewy CFO Jim Grube — arrived two months after Cohen sent a letter in November to GameStop’s leadership saying the company was not reaching its potential.
“If GameStop takes practical steps to cut its excessive real estate costs and hire the right talent, it will have the resources to begin building a powerful e-commerce platform that provides competitive pricing, broad gaming selection, fast shipping and a truly high-touch experience that excites and delights customers,” Cohen wrote. “This is the type of world-class infrastructure that was constructed at Chewy, which is worth multiples of GameStop’s current market capitalization.”
Cohen’s 13% stake in GameStop was worth nearly $3.15 billion at the close of Wednesday trading. Cohen sold Chewy to PetSmart in 2017 for more than $3 billion. Cohen left Chewy in 2018; it went public in 2019.
Wedbush Securities managing director and digital services stock analyst Michael Pachter said many Wall Street analysts remain skeptical of GameStop’s recent share-price moves. For one thing, Cohen has not revealed details of how he would raise revenues at a company that saw sales fall 31% in the first half of 2020 despite Americans staying at home with time to download video games from GameStop’s website.
But Pachter said enough traders seem to agree with Cohen that GameStop’s shares were undervalued, and that he could help increase that value.
“What he did at Chewy was audacious,” Pachter said. “He had a vision, and it worked, and Chewy made billions. Now he wants to take that to GameStop.”
This story was originally published January 27, 2021 at 10:33 AM.
