According to The Wall Street Journal, GameStop CEO and Chairman Ryan Cohen is planning a major acquisition of a publicly traded company, likely in consumer or retail, to transform the $11 billion videogame retailer into a $100 billion-plus entity. He has a handful of specific targets in mind and plans to approach them soon, calling any potential deal “big” and admitting it will be seen as “either genius or totally, totally foolish.” Earlier this month, GameStop’s board adjusted Cohen’s compensation, creating a performance award that could grant him up to $35 billion in stock if the company’s market value hits $100 billion and its adjusted EBITDA reaches $10 billion. The first part of the award starts vesting at a $20 billion market cap and $2 billion in EBITDA. Cohen, who co-founded Chewy and sold it for over $3 billion, has been buying more shares and now owns over 9% of GameStop, which has about $9 billion in cash and liquid securities to fund a deal.
The Moonshot Payday
Here’s the thing: that $35 billion potential payday is absolutely staggering. It makes the headlines, for sure. But you have to look at the numbers required to get there. GameStop’s market value needs to jump from about $7 billion today to $100 billion. That’s more than a 14x increase. Its profitability metric needs to soar from essentially nothing to $10 billion. We’re talking about turning a struggling brick-and-mortar retailer into a company nearly as valuable as, say, Target or Starbucks. It’s the ultimate “moonshot” package, clearly inspired by the structures used for Elon Musk at Tesla. The board’s argument is simple: if Cohen somehow creates $93 billion in new shareholder value, he deserves a huge slice. But it also means that if the stock just muddles along or even does pretty well, he gets nothing from this award. All the risk—and potential reward—is on him.
Burry Backs The Berkshire Playbook
Now, the most interesting endorsement comes from Michael Burry. He’s not just any investor; he’s the famously prescient (and often contrarian) figure from *The Big Short*. In his newsletter, he explicitly told GameStop to run the “Berkshire Hathaway playbook.” His logic is brutal but clear: Cohen “has a crappy business, and he is milking it best he can while taking advantage of the meme stock phenomenon to raise cash and wait for an opportunity to make a big buy of a real growing cash cow business.” Ouch. But it’s a fascinating thesis. Burry suggests using that $9 billion war chest to buy something like an insurer—a business that generates steady, investable customer premiums. He also points out GameStop’s stash of net operating losses, which could shield a profitable acquisition from taxes for years. Basically, Burry sees GameStop not as a retailer, but as a shell corporation with a great balance sheet, waiting for its true purpose.
From Meme to Machine?
Cohen bristles at the “meme stock” label, saying it’s for people who “don’t want to do the work.” Fair enough. But let’s be real: the meme stock frenzy of 2021 is the only reason GameStop has this $9 billion cushion. It allowed them to sell stock at insane valuations and survive. The question is, can he pivot that financial accident into a deliberate, operational masterpiece? He says there are “a lot of diamonds in the rough” in retail with “sleepy management teams.” That’s classic activist investor talk. But making a huge acquisition work is a different beast than agitating for change from the outside. It requires integration, vision, and execution on a scale he hasn’t attempted before. The entire plan hinges on him finding that one perfect, undervalued cash-generating machine and not overpaying for it in a very public bidding war.
What It Means For Everyone Else
For shareholders, this is a binary bet. You’re either buying into Cohen’s ability to be a capital allocator on par with his idols, Buffett and Icahn, or you’re not. The stock will swing wildly on any rumor of a target. For the retail industry, it puts a host of mid-sized public companies on notice. Any consumer-facing business with a solid cash flow but a lagging stock price could suddenly get a call. And for the market narrative? It’s a full-circle moment. The meme stock saga, which was born from a bet against hedge funds, now has one of finance’s most famous skeptics cheering its CEO to become a conglomerate builder. Whether you think this is visionary or utterly foolish, you can’t say it’s boring. The whole thing is a high-stakes experiment in whether internet-fueled capital can be channeled into old-school empire building. We’re about to find out.
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