GameStop (NYSE:GME) is taking seriously the suggestion by activist investor and board member Ryan Cohen that the video game retailer transition into an e-commerce company -- an Amazon of gaming of sorts.

According to Bloomberg, Cohen will chair a new committee to guide the retailer's transformation, and he will be joined by two other activist investors: Alan Attal, who came with Cohen from Chewy.com, and Kurt Wolf, the founder of Hestia Capital, who began agitating for change in 2019 and was eventually appointed to the board. 

Together they will lead the new Strategic Planning and Capital Allocation Committee.

Four friends playing video game

Image source: Getty Images.

A new way of doing business

It's an audacious plan. Cohen has said GameStop needs to offer a credible method for controlling costs by focusing on its most profitable retail locations while developing and enhancing its e-commerce capabilities.

Because GameStop has a brand that's virtually synonymous with the gaming industry, plus a massive customer base, it has a rare opportunity to reinvent itself. Cohen subsequently took a 13% stake in the video game retailer.

It was Cohen's appointment to the board in January that helped generate the enthusiasm on the Reddit discussion forums that launched the rally in GameStop's stock in late January. Believing the company was serious about its turnaround and angry that short-sellers were attempting to beat down its already deeply discounted shares, traders began buying up shares and options that fueled the massive short squeeze.

After the brouhaha died down, one of the early instigators of the rally, Keith Gill, who goes by the nickname Roaring Kitty (and some other colorful terms on the boards), maintained he was still bullish on the business and doubled his stake in the stock to 100,000 shares.

That started a second rally in GameStop, and the video game retailer's stock remains some 630% above where it started 2021.

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