Cohen's $10.5 Million GameStop Gamble: Should Investors Reconsider This Meme Stock?

Ryan Cohen, the mastermind behind Chewy’s explosive growth, isn’t just talking about his vision for GameStop — he’s putting serious money behind it. Recent SEC filings reveal that Cohen has acquired 500,000 shares of the video game retailer at an average price of approximately $21.12 per share, totaling over $10.5 million in purchases. This aggressive insider buying signals something important: the company’s leader genuinely believes in its turnaround potential, a stark contrast to the skepticism surrounding this infamous meme stock.

Cohen’s belief matters because GameStop’s challenge is real. The brick-and-mortar video game retail business — once the company’s lifeblood — is structurally declining. When Cohen took the CEO helm in late 2023, the market was pricing in continued decline. But nearly two years into his tenure, the company’s transformation narrative is becoming increasingly difficult to dismiss.

The Business Metamorphosis: More Than Just a Dying Retailer

Since taking control, Cohen has aggressively repositioned GameStop’s business model. The company has ventured into collectibles, accumulated Bitcoin for its treasury, slashed expenses, and significantly reduced its physical store footprint. The results paint a nuanced picture.

Looking at performance through the first nine months of 2025, the hardware business (gaming consoles and related equipment) has declined approximately 5%, which while still negative, represents stabilization rather than freefall. More concerning is the software division, which contracted 27% year-over-year — evidence that this legacy business segment continues to erode. However, here’s where things get interesting: the collectibles segment, encompassing apparel, toys, trading cards, and gaming merchandise, surged 55% during the same period.

The financial fundamentals are strengthening in ways that extend beyond revenue mix shifts. The company generated $0.67 in diluted earnings per share through the first nine months of 2025, a dramatic improvement from the same period in the prior year. Operating cash flow has increased substantially, reflecting better operational discipline. With a market capitalization of $9.7 billion, GameStop trades at approximately 2.3 times trailing revenue — a reasonable valuation when viewed in isolation.

The Wall Street Calculation: Promising, But Unproven

Wall Street’s coverage of this meme stock remains sparse, with only a single analyst actively following the company. That analyst projects GameStop will reach nearly $1.00 in earnings per share for 2026, with total revenue hitting $4.16 billion — both figures implying year-over-year growth. At current prices, this translates to a forward earnings multiple of roughly 22 times, which presents a valuation puzzle.

The tension is unavoidable: GameStop can likely continue cutting costs and improving operational efficiency, but the company has yet to stabilize revenue in its largest business segment. The collectibles growth is encouraging, but one growth engine doesn’t automatically transform a company facing headwinds in its core businesses. The earnings multiple feels stretched for a company still writing its future.

The Verdict: Cautious Optimism Meets Practical Skepticism

Cohen’s $10.5 million buy demonstrates insider confidence in the turnaround thesis. The financial trajectory has undeniably improved. Yet this meme stock remains a bet on whether GameStop can successfully pivot before its legacy businesses deteriorate beyond recovery — and whether collectibles can scale into a meaningful revenue driver for a company that once dominated video game retail.

The situation has evolved considerably from the hype-driven days of meme mania. Whether that evolution is sufficient justification for investors to jump in remains genuinely unclear. Improving financials and insider buying are positive signals, but they haven’t yet translated into a resolved business model or sustainable competitive advantage. For risk-averse investors seeking clarity, waiting for additional proof points remains the prudent approach.