GameStop is just playing with its fans now

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Companies should raise funds at good rates when they can get them. This is common sense. But adding more than $450 million to a $4 billion treasury without detailing plans for the cash? That’s just naughty.

Investors may have finally had enough. Shares of GameStop fell 12% in a stock sale this week after rising the last two times the retailer turned to shareholders for funds for which it had no clear plans.

It’s been a year since investor Ryan Cohen added the executive to his role as chairman of GameStop. His appointment initially encouraged retail investor hopes that the founder of Chewy, the online pet store and one-time supporter of fellow meme stock Bed Bath & Beyond, would work his magic on their beloved gaming retailer. But so far, there is little evidence of change beyond a reduction in spending. GameStop’s stated goals—profitability, leveraging its brand, and “omnichannel excellence”—were neither changed nor updated.

Management said very little, in fact, beyond the mandatory filings and held no quarterly earnings calls. That’s not for lack of interest: online demand to attend the annual general meeting in June was so great that the hosting site crashed and the meeting had to be rescheduled.

Enthusiasm from its army of retail investors is the only reason GameStop has been able to raise so much money. Two stock sales in May and June have already brought in $3 billion. These coincided with increased investor interest around the online return of Roaring Kitty — real name Keith Gill — the company’s main investor cheerleader during the crazy meme-stock days of 2021. Assuming GameStop sells its planned 20 million new shares , its cash pile will reach about $4.6 billion. , or about half of its market capitalization.

It’s starting to look more like an investment holding company with a small side business dealing in games and collectibles — a view supported by its creation in the past year of an investment committee made up of Cohen and two other executives. According to GameStop documents, the committee manages its investments in public and private markets; its members can also put their own money alongside GameStop dollars.

References to “GameShire StopAway” started popping up among rocket emojis and HODL (hold on for dear life) exhortations on Reddit’s investment forums. Less than complimentary comparisons to Warren Buffett’s holding company, Berkshire Hathaway, suggest the mood has changed. Investors may be getting impatient with GameStop. It was about time.

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