Nearly two years after the notorious January 2021 run up of GameStop’s stock, the company’s very private and out-of-the-spotlight chairman, Ryan Cohen, sat down for an interview Joe Fonicello from GMEdd.com.
The choice of outlet was an interesting one. Cohen could have easily interviewed with large-scale, mainstream media like CNBC, the Wall Street Journal, Bloomberg and the like. Instead, he opted to end his media hiatus via a small-scale media outlet founded by independent researchers with an audience base of dedicated individual shareholders.
To the global, hundreds-of-thousands-strong retail investor base, an orchestrated negative press campaign against GameStop is indication of a clandestine, vested interest in the company’s failure. Positive developments for the company, of which there have been many, are cast in a negative light or otherwise left out all together.
“At least now with the internet, there’s a lot more competition for the mainstream media,” Cohen says. “There’s a lot more avenues to get your story out — GMEdd is a really good example of that.”
GMEdd was born out of the late 2020, early 2021 price run up, which was also the catalyst for everyday investors coming together in the very active Reddit communities of r/Superstonk, r/GMEjungle, and r/DDintoGME. Since then, they have continued to share notes on all aspects of financial markets with GME price action serving as home base.
Members of these communities have continuously published in-depth research on everything from the inner workings of stock brokers, “consultant” groups that routinely profit from the demise of companies where they occupy board chairs, the mechanics of short selling, bizarre idiosyncrasies in data reporting, lack of regulation, as well as headline making events like Credit Suisse’s rumored solvency issues, FTX’s implosion, incredible escalations in the reverse repo market, and more.
This ongoing collection of work has functioned as a sort of counterculture financial media stream.
Importantly, these communities have produced a robust body of research not always aligned with content published by Wall Street-backed media outlets such as CNBC, MarketWatch, the Wall Street Journal, and others who have remained deafeningly quiet in their reporting of Cohen’s interview.
The general consensus among retailer investors is that acknowledging the interview would mean potentially drawing attention to the robust body of research published on GMEdd.com. GMEdd.com covers developments in GameStop’s turnaround plan, including the launch of GameStop’s NFT marketplace, elimination of long-term debt, and other events that might indicate GameStop’s future isn’t quite as dreary as the headlines lead on.
In the 40-minute interview, Cohen compares and contrasts the business models of Chewy, a company he built from the ground up, and GameStop, a decades-old company whose board he joined during a pivotal period in the company’s history.
“GameStop is different,” Cohen says. “We inherited a bunch of legacy…everything. An underinvestment across the entire business. People, the entire technology stack, just decades of neglect. It’s hard to turn around a brick-and-mortar retailer that’s under the kind of pressure that GameStop was…and continues to be under. But that was also part of the attraction. I like tough things.”
If there’s something making that “tough thing” easier, it’s a dedicated collective of small-scale shareholders who remain steadfast in their belief and investment in GameStop’s turnaround plan. In the two years since the run up, hundreds of thousands of individual investors have continued to hold their capital in GameStop. It’s a fanfare Cohen acknowledges has helped GameStop’s ongoing redemption arch.
“It’s great branding. There’s no amount of money that can get the kind of branding that we got from GameStop. It made the company world renowned. It brought a lot of attention to the company. It was hugely beneficial for the brand,” Cohen says.
But aside from that, at the heart of the interview, Cohen questions Wall Street’s misaligned incentives with the companies they exert control over. It’s a theme that has surfaced repeatedly in his Tweets.
“Whether it’s mutual funds, or private equity, or venture capital…a lot of these structures are set up where it’s ‘heads, I win, tail you lose’…they make money regardless,” Cohen tells Fonicello. “I don’t really understand that concept…there shouldn’t be ulterior motives. I think it’s misaligned with investors.”
By and large, GameStop shareholders feel similarly. The events surrounding the GameStop price run of 2021 have shaken faith in the stock market among Main Street investors. Nevertheless, they continue to hold their GameStop shares. In fact, GameStop shareholders have taken their stake in equity one step further by direct registering shares in their names under the rallying cry “lock the float.”
Consensus among the shareholder base asserts that removing shares out of street name (i.e., Wall Street’s name, by holding them in brokerages) and into their own names drains liquidity, thereby reducing the number of shares available for short selling. Short selling erodes share value by saturating the market with synthetic shares, or shares held in “borrow/locate” status.
“I’m not a fan of short sellers, and I’ve shared that sentiment before,” Cohen says. “I think it’s interesting that if you’re long, you have to disclose those positions, but if you’re short, you don’t have to. It should be the same rules that applies to short sellers.”
According to GameStop’s most recent form 10-Q, there were 71.3 million shares directly registered with the company’s transfer agent, Computershare, as of July 30th, 2022. That represents more than 23% of total shares outstanding, and more than 28% of the total reported free float. These figures will presumably be updated during GameStop’s upcoming earnings call on December 14, 2022.
Less than 48 hours after publication, the interview has garnered more than 130,000 views.
Watch Ryan Cohen’s interview with Joe Fonicello of GMEdd.com below.