After weeks of little to no news, meme stocks are finally making a comeback. Most popular social media stocks like GameStop (NYSE: GME) and AMC (NYSE: AMC) were up on Tuesday as trading volume skyrocketed. The main catalyst behind this jump was GameStop chairman Ryan Cohen, who announced he bought up another 100,000 shares in the popular video-game retailer.
Many investors had high hopes for GameStop following the appointment of Ryan Cohen as its new chairman. Cohen, who co-founded the pet-supply retailer Chewy and managed to turn it into a massive online business, was picked by a special committee in order to help turn GameStop around. Since then, his efforts haven’t yielded much in the way of results.
However, it hasn’t stopped social media traders from paying close attention to Cohen’s moves. This includes the executive’s most recent decision to buy over 100,000 shares, roughly around $10 million worth in stock, bringing up his total ownership of the company up to 11.9%.
Before this, Ryan Cohen had bought up a substantial stake in another meme-stock of sorts, the retailer Bed Bath & Beyond (NYSE: BBY). Just as how shares of Bed Bath & Beyond skyrocketed on the news, so too did shares of GameStop surge on Tuesday after Cohen’s new investment. Shares were up over 30.9% on Tuesday, with pre-market trading adding another 16.9% in fresh gains.
However, this wasn’t the only piece of news related to GameStop. The company is now getting sued by a firm known as the Boston Consulting Group, which is claiming it hasn’t been paid more than $30 million in fees.
The consulting group claimed that it spent tens of thousands of hours working on GameStop and helping it turn it around, with the firm claiming it “overachieved” based on its deliverables.
GameStop responded quickly to the news, vowing to fight against the lawsuit. The company claimed that the consulting group’s claims don’t make much sense, especially since the company’s stock, sales, and debt levels were at perilous levels throughout the consultant’s period of employment.
“It is confounding that the high-priced consultants at BCG claim to have delivered hundreds of millions in value for GameStop during a period when share price, sales and debt were at perilous levels,” GameStop said in a statement.
As expected, the lawsuit news is already being buried amidst the general “meme stock” buyup following Cohen’s personal investment. The lawsuit likely won’t have much impact on GameStop in the long run.
GameStop Company Profile
GameStop Corp is a U.S. multichannel video game, consumer electronics, and services retailer. The company operates across Europe, Canada, Australia, and the United States. GameStop sells new and second-hand video game hardware, physical and digital video game software, and video game accessories, mainly through GameStop, EB Games, and Micromania stores and international e-commerce sites, including www.gamestop.com, www.ebgames.com.au, and www.micromania.fr. The company has two main business segments: Video game brands and Technology brands. The technology brands segment sells wireless products and services and operates Spring Mobile managed AT&T and Cricket Wireless branded stores, along with the Simply Mac business. – Warrior Trading News