It came to me when I was studying the brilliant subscription product that Roblox (RBLX) offers and the strength and stickiness of the Chewy (CHWY) model with its auto-renewal policy.
Yep, it dawned on me what Ryan Cohen, the putative CEO of GameStop (GME) , the most important stock of a new generation of investors, is going to do to save the ailing chain.
Right now GameStop is being propped up by a trend -- the shortage of gaming hardware as new cycles drag on -- and Reddit's Wall Street Bets people. Their intransigence, their strength in numbers, allowed the company to raise $551 million in the stock market. The success of the offering -- it failed to kill the stock -- gave the "Bettors" still one more victory in the stock. Remember the narrative: The rich fat cats, of which I am apparently one, want the stock lower, while "the people," want it higher. GameStop as class struggle?
First, it's a total false narrative. I want people to make money, not lose money, and if you own the stock of GameStop this year, you are up more than 640%. I salute you.
Second, I got the plan. I am the man with the plan to save this sorry chain of yesteryear.
When Ryan Cohen bought a big chunk of stock, then became a Trojan horse, gradually kicking out everyone who may not play ball with him, he set himself up for something that has to be done to bail this thing out.
To date he's told us nothing.
Ryan, and I hope he doesn't mind if I call him Ryan, helped found Chewy, which is, as I mentioned, a fantastic subscription business. When he bought all of that stock, joined the board and then forced out management, I think he saw GameStop as a company as a gateway to helping GameStop's 20 million rewards members a way to buy games over the net as a subscription business, the way he created Chewy's model.
Ryan should go to the three major video game manufacturers, Activision Blizzard (ATVI) , Take-Two Interactive (TTWO) and Electronic Arts (EA) and say that that his members want a game bundle, just like a cable bundle, for a set fee. GameStop can then offer a skinny bundle to its rewards members with just the most popular games or a larger bundle with all of their games included.
The three gaming companies get a big percentage of the cable bundle, but GameStop cleans up.
Why would the gaming companies be interested? They have no choice. These 20 million members would hold fast and buy the bundle that I think Ryan can negotiate.
Further, GameStop can offer an exchange of in-game apps that people spend so much money on. Maybe you have too many in-game apps for a Take-Two game. You can swap them with someone who needs in-game apps from Activision Blizzard game. Members can also get discounts for all in- game apps and gizmos that make games more exciting.
Oh, for pizzaz purposes, Cohen could say you have to pay for your bundle in Ethereum and he could offer crypto exchanges using his 5,000 odd stores as temporary transactional banks until he phases out brick and mortar altogether. He has to let those leases expire or buy himself out of those leases, using the money he raised on the backs of the Wall Street Bets people. Once he's out of brick and mortar and in the bundling game, he has a total asset light model that can coin money, some of which he can put into Ethereum to make it even more cogent.
You see what Cohen bought wasn't the stores, it was the membership group. Those are the pet owners of Chewy and the pet food are the big three, all of which will have no choice but to play ball.
There you go Ryan. I ask for nothing other than to show the Wall Street Bets that I, too, want it to work but unlike them, I've got the plan, and it's a good one.
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