What's up guys and welcome to wall street millennial today, we're looking at some recent developments at gamestop, which could be huge for the company's turnaround plans, keep in mind that we are not financial advisors and this video is for entertainment purposes. Only make sure you do your own research before making any investment decision. On the morning of thursday april, 8th gamestop announced the billionaire founder of chewie, ryan cohen, will become the chairman of the board of gamestop. They announced the nomination of six different individuals for election to become board members in the board's intent to elect ryan cohen.

As chairman, this election will take place two months from now on june. 9Th ryan cohen is an extremely instrumental figure in the dynamics of the business of gamestop and has pushed for many of the corporate actions that have led to gamestop stock price increase in the past several months. This includes back in february when gamestop announced the resignation of its cfo jim bell. That move was seen as a catalyst for growth of the company, because the old cfo was considered by investors to be stuck in the past and unable to push forward gamestop's growth potential.

On that piece of news, gamestop stock, more than doubled and started a full month of gains for the stock that rivaled the legendary january short squeeze. It was rumored that the resignation of the cfo was a direct result of ryan cohen, pressuring the company to make major changes in order to align with cohen's vision for the company. This would not be the end of cohen's activism around gamestop, with the revamp of the board of gamestop. It is clear that ryan cohen is pretty much taking over the company.

The six new board members consisted of an incredible amount of chewy influence, including alan atall, who was the ceo and chief marketing officer at chewie. Another new board member is jim grube, who was, in fact the chief financial officer at chewie for three and a half years, and previously held leadership roles at amazon and hilton and at the very top of it all is ryan cohen himself. Who will now be not only a board member but the chairman of the board? Another extremely important part of the press release was this single sentence after the board meeting on june 9th, all the directors of gamestop will be compensated solely in the form of stock. This provides an incredibly strong incentive for the board members to do what is best for gamestop stock price.

One of the things that the billionaire warren buffett looks for in a company is good management, a big part of what he means by that is management. That is incentivized to do what is best for shareholders, with 100 of director compensation being in the form of stock. The interest of gamestop's management and shareholders will be almost completely aligned just three days before the announcement of ryan cohen's placement. As chairman of the board gamestop announced on april 5th that they would be selling up to three and a half million shares of stock to be used to accelerate their corporate transformation.

It constitutes a so-called at the money offering which means that will be selling the stock. Opportunistically at times over the course of the next several months. This is what many experts have said that gamestop should be doing and will help to give the company the financial firepower to accelerate ryan cohen's plans for the company, the billion dollars in a war chest. But they had pretty good balance sheet anyway.

This is what people should be waiting for and those who are selling the stock are not realizing that this is the the ability for uh for ryan. We don't know that much but a little bit of mystery and got that uh uh ice cream cone to be able to be able to do something and they've got a supercharged group. But you know whenever you do these offerings uh there are people who say this. Busts, the short that this basically makes it so you that there's no tightness, i don't think there's been a big short position in gamestop for a long time.

So i applaud this. I think it's what was needed. I know i called for it endlessly and those who are selling off this. I challenge i challenge whether they realize that this is the whole war chest that ryan may need to be able to make this company a different company, so i'm very encouraged by it.

Well, so that's my question: how much do you think he really needs to transform to transform this business fundamentally because you think about trying to get into a digital really get into the digital business and compete against the big guys. That's billions of dollars? No, maybe even more but maybe they've got a plan to be able to do something involving um crypto. Maybe they've got a great plan in order to be able to sponsor esports where they give scholarships to ncaa schools for people who do esports. I've got a lot of different plans for these guys.

So far, they've really kind of uh, let's just say, been been mum, but there are lots of things they could do andrew. That could reinvent the company, including putting gigantic video game parlors in those uh malls where the end cap of the wall is empty, so they they need the money um. But if things work out, it could be huge. They have really an incredible group of people.

I can't believe that we get them so now that gamestop has significant dry powder in terms of cash on its balance sheet and ryan cohen has officially been named as chairman. What will the company actually do in their 2020 10k filing? They laid out some of the possible growth strategies they plan to use their available cash to fund their so-called reboot transformation initiatives under the reboot initiatives. Gamestop will leverage its unique position and brand in gaming to expand their addressable market within the gaming industry. Specifically, they plan to expand the business by shifting the focus from brick and mortar source to ecommerce with gamestop.com.

They say the key areas of future investments include improving presentation and content, as well as the functionality general search and navigation across the customer facing digital channels. This is just a fancy way of saying that they're going to upgrade their website in addition to upgrading the website, they plan to strengthen and deepen their information technology analytics marketing and e-commerce teams and capabilities. They finally plan on upgrading their fulfillment operations to improve delivery capabilities to reduce delivery times and shipping costs. From these statements in the 10k, it is clear that ryan cohen is going all in on e-commerce.

Developing gamestop into an e-commerce powerhouse is no small task, but if anyone can do it, it's ryan cohen. He is the founder and former ceo of chewie, the country's leading pet ecommerce company, which is now worth more than 30 billion dollars likely at the direction of cohen. Gamestop has also made some high-profile c-suite hires, with extensive expertise in e-commerce. For example, in late march, they hired former amazon executive, elliot wilkie, as gamestop's chief growth officer, elliott, held multiple senior level roles at amazon, including director of private label brands.

A private label product is one that a retailer gets produced by a third party but sells under its own brand name. The fact that they hired someone with private label experience may be indicative that gamestop may plan to start selling private label products themselves. This means that they may eventually start rolling out gamestop branded gaming peripherals such as keyboards mice and headsets. They also may start focusing more heavily on pc games.

They recently started a promotion for pc gaming peripherals such as routers and monitors. This could be a new growth opportunity for the company to expand away from their traditional focus on console games. Gamestop already has a significant e-commerce business to build upon in the third quarter of 2020, their online sales increased 433 and made up about 25 of their total sales. This is already a big improvement from the historical level of mid single digits ecom penetration.

They also rolled out same-day delivery for online transactions. They also developed a new gamestop app which can be used to order products online. In 2021. They plan to expand the features of the app to include a gamer news, feed and digital wallet.

These features could boost customer engagement with gamestop and drive more ecommerce sales. Gamestop's brick and mortar retail stores were once considered a liability to the company, but they are actually an extremely valuable asset for e-commerce. Fulfillment gamestop has 3 1992 physical retail locations in all 50 states. They even have two stores in guam.

This means that the vast majority of americans live within driving distance of a gamestop store. They recently started leveraging these stores to offer same-day delivery that is fulfilled from their stores. If you order an item before 3 p.m, a delivery driver will pick it up from your local gamestop store and bring it to your home by 9 pm. This is even faster than amazon prime same-day delivery, which only promises to deliver your item by 10 pm.

Alright guys that wraps it up for this video, what do you think about ryan cohen being appointed as chairman? Do you think their turnaround plan will work? Let us know in the comments section below also check out our second channel wsm research, where we publish dd on high growth, tech stocks, as always. Thank you so much for watching and we'll see in the next one wall, street millennial signing out.