An unusual resurgence in top meme stock GameStop has made Ryan Cohen, the activist investor promising a turnaround for the struggling video games retailer, a billionaire once again just two days after a shakeup in the firm’s executive ranks.
Ryan Cohen, the cofounder and former CEO of pet food and supplies seller Chewy.com.
With shares of GameStop skyrocketing 170% over the last 24 hours, the fortune of new board member Cohen has nearly doubled to about $1.5 billion as of 12:45 p.m. ET, Forbes estimates.
Cohen’s renewed billionaire status comes exactly three weeks after he fell out of the ranks on February 4 as GameStop shares–crippled by dwindling short interest that helped fuel their surge–plunged 85% from a record close January 27 (that’s still more than twice as much as current prices).
Analysts are puzzled over why shares are minting such a crazy turnaround, but the 100% surge Wednesday came less than two hours after Cohen, the cofounder and former CEO of booming e-commerce firm Chewy, tweeted an image of a McDonald’s ice cream cone accompanied by a frog emoji–with no further explanation.
Neil Wilson, a chief analyst at Markets.com, wrote in a note to clients Thursday that Cohen might be teasing the Reddit crowd by suggesting he’ll “fix [GameStop] the way McDonald’s finally fixed its ice cream machines”–a play on the meme joke that the fast food giant’s ice cream machines are notoriously unreliable.
Cohen, 36, hasn’t responded to Forbes request for comment, but the rapid price increase also coincided with a spike in trading volume right before Wednesday’s close (reminiscent of peak price mania in late January), with nearly 50 million shares trading hands–compared to just 7 million on Tuesday.
Meanwhile, some Reddit traders are pinning the gains to a shakeup in GameStop’s C-suite late Tuesday, when Chief Financial Officer Jim Bell–part of the executive team Cohen railed against in a November letter–resigned after the firm’s board allegedly lost faith in his ability to help shift the company to an e-commerce focus.
It’s still unclear how long GameStop shares can retain their latest stratospheric highs, but this week’s surge proves the absurd valuations weren’t a one-off occurrence, and some experts think the moves could become routine. Oanda Senior Market Analyst Edward Moya said in an email Thursday afternoon that it’s likely institutional money is behind the current upswing given a swath of options currently set to expire. That effectively forces investors to either double-down on their risky bets or unwind their positions–the perfect recipe for volatility, notes Moya. “The institutional money behind this move found options expiration as a pivotal opportunity that will make it easier for market disruption,” Moya says.
Cohen purchased 9 million GameStop shares at the tail-end of last year for about $76 million–a pittance compared to the $1.3 billion they’re worth today–as he mounted an effort to turn the Grapevine, Texas-based brick-and-mortar into a thriving e-commerce firm. His growing investment helped him nab three seats on GameStop’s board in January–one for himself and two for a couple of his former Chewy executives. On top of that, GameStop this month hired one of Cohen’s Chewy executives, Kelli Durkin, as vice president of customer care, and tapped Amazon Web Services veteran Matt Francis to serve as chief technology officer.
“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 said in November. “This is the type of world-class infrastructure that was constructed at Chewy, which is worth multiples of GameStop’s current market capitalization.”
Other so-called meme stocks are also soaring Thursday. Koss Corporation and AMC, for example, are up 13% and 56%, respectively.
Dow Breaks From High As Yield Concerns Mount And Meme Stocks Forge A Comeback (Forbes)
GameStop CFO Ousted In Shakeup (Forbes)
GameStop’s Massive Surge Creates A New Billionaire As Reddit Traders Bet Against Wall Street (Forbes)
I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism