GameStop ascent mints overnight billionaires

Wednesday, January 27, 2021

Call them the Reddit Rich.

GameStop’s parabolic stock surge over the past two weeks, driven partly by the Reddit Wallstreetbets crowd, has created more than US$2 billion in personal wealth for the company’s three biggest individual shareholders. While it may not last long, the massive shareholder gains created in such a short time gives new meaning to the notion of instant wealth in the digital age.

The chief beneficiary of the GameStop rise is Ryan Cohen, the co-founder of Chewy who made an investment in GameStop last year in an effort to help the company accelerate its push online. Cohen started buying GameStop shares in August and added to his position in December. He invested a total of US$76 million for a stake of about 13 percent of the company.

As of the market close Tuesday, Cohen’s 13 percent stake was worth over US$1.3 billion. So over the past two weeks, Cohen’s net worth increased an average of US$90 million a day, or nearly US$4 million per hour. Cohen couldn’t be reached for comment.

The other big GameStop winner is Donald Foss, the 76-year-old founder and former CEO of Credit Acceptance Corp., a subprime auto lender. Foss, who lives in Michigan, bought 5 percent of GameStop last February for about US$12 million. His stake is now worth more than US$500 million, bringing his total net worth to nearly US$2 billion, according to Forbes. Foss couldn’t be reached for comment.

GameStop CEO George Sherman has seen his 3.4 percent stake in the company jump to a value of about US$350 million.

So far, none the Big Three shareholders appear to have sold any stock. Several board members trimmed their holdings between Jan. 13 and 15, when the stock first started its rise. Those sales may have been part of preschedule selling programs.

GameStop was continuing its ascent Wednesday. It more than doubled and hit a fresh 52-week high of US$354.83, before trimming its gains.