Before 2021, GameStop was on its way out. It was sitting around $15/share, and its prospects were looking slim. As stores closed left and right, it became less able to service its debt by the day.
So how in the world did it claw its way from death’s door to the $150+ range?
You might be thinking, “Dustin, it’s a meme stock. That’s why.”
But that’s only part of the story…
You see, those meme stock traders (and other investors) saw something, or, rather, someone: Ryan Cohen, co-founder and former CEO of Chewy (CHWY), an eCommerce site for pet owners.
Cohen left Chewy in 2018 to spend some time with his family and pursue personal goals. But in January 2021, he got back into the game, joining the GameStop board and being appointed Chairman.
He promptly added two board seats at GameStop and filled them with Chewy executives.
This got investors excited and caused the rally: they believed a GameStop pivot into eCommerce (which is exploding) could save the brand.
Per Front Office Sports:
Cohen is a GameStop board member whose RC Ventures owns around 13% of the company’s stock. The Chewy co-founder will head up the video game retailer’s new Strategic Planning and Capital Committee.
The committee will be tasked with transforming GameStop “into a technology business” with a strong focus on e-commerce, per a company release. Analysts believe the announcement may have sparked the latest surge in the company’s stock price.
But that’s just one example. Let’s look at another dying retail that made a big turnaround: Bed, Bath, and Beyond (BBBY). Not as publicized as GameStop, but a similar story here.
BBBY was at $10/share by late 2020. It, too, looked like its time had come…
Until earnings hit in October 2020.
BBBY posted a surprise profit of $0.50 per share, wowing analysts who expected a $0.23 per share loss.
How did BBBY do it?
By pivoting to eCommerce: that October 2020 earnings report showed that they boosted online sales by 80%. Same-store sales also increased by 6%, far ahead of the 2.1% decline analysts were predicting.
Other retailers holding on for dear life might want to take note.
Now, both of these stocks have been quite volatile. You can partially thank the meme stock craze for that.
But what if there was a similar stock without all the eyeballs on it? A company undergoing a similar eCommerce pivot that had a steady trend?
There is… and I only know about it because I just noticed an insider drop $200k on the stock in anticipation of earnings. This company managed to grow eCommerce sales by 45% in March alone!
If this company is anything like GME and BBBY, it could see a huge rally as well.
This company’s still in the buy zone. But earnings are coming up at the end of August. This stock could move fast, especially if that insider’s confident enough to scoop up $200k right now.
So don’t wait any longer…