Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

GameStop Soars After Adding Three Activist Board Members

By Rhian Hunt - Jan 13, 2021 at 1:58PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A short squeeze is underway after the company met an activist investor's demands.

The stock of video game retailer GameStop ( GME -3.06% ) is skyrocketing today in an apparent short squeeze, with short-sellers buying up shares in massive quantities to cover the liquidation of their positions. GameStop's shares were up nearly 70% as of 1:54 p.m. EST today.

Short interest in GameStop was noted as being a significant percentage of its total float at the start of this week, and today's explosive stock market movement seems to be a short-seller response to an announced agreement with activist investor RC Ventures.

While GameStop's shares rose approximately 17% in trading Monday, that was dwarfed by today's gains. The company says it will place three candidates advanced by RC Ventures -- Jim Grube, Alan Attal, and Ryan Cohen -- on its board of directors. The appointments are effective immediately, raising the number of directors from 10 to 13.

A steeply rising stock chart on a green background.

Image source: Getty Images.

In a press release, GameStop refers to the appointments as a "refreshment" of the board, asserting that the new appointees "bring deep expertise in e-commerce, online marketing, finance and strategic planning" to its operations. Board chair Kathy Vrabeck added that these skills should "help us accelerate our transformation plans and fully capture the significant growth opportunities ahead for GameStop." The new directors will be eligible for reelection to a reshuffled nine-member board during GameStop's annual meeting in June.

Analysts at Baird echoed Vrabeck's statements, noting that the directors now include three individuals with previous experience at online pet supply seller Chewy ( CHWY -5.03% )which has seen outstanding performance during recent quarters, based on the strong success of its e-commerce model.

Baird said that although pet food and video games are very different markets, GameStop as a platform should benefit from the new directors' e-commerce background nevertheless.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

GameStop Corp. Stock Quote
GameStop Corp.
$167.12 (-3.06%) $-5.27
Chewy, Inc. Stock Quote
Chewy, Inc.
$59.54 (-5.03%) $-3.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.