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GameStop: the story on HearLore | HearLore
GameStop
GameStop traces its origins to a single store opened in 1984 by two former Harvard Business School classmates, James McCurry and Gary Kusin, who named their Dallas-based venture Babbage's after the 19th-century computer pioneer Charles Babbage. The founders secured early backing from Ross Perot, a prominent businessman and investor, and launched their first location in the NorthPark Center shopping mall, focusing initially on software for the Atari 2600, the dominant gaming console of the era. By 1987, the company had expanded its inventory to include Nintendo games, and by 1991, video games accounted for two-thirds of all sales, establishing a clear market focus that would define the company's future trajectory. The company went public in 1988, marking its transition from a local startup to a publicly traded entity, setting the stage for decades of expansion and consolidation in the retail gaming sector.
Mergers And Bankruptcy
In 1994, Babbage's merged with Software Etc., an Edina, Minnesota-based retailer specializing in personal computing software, to form NeoStar Retail Group through a stock swap that allowed shareholders of both companies to receive shares in the new holding company. Despite retaining their independent management teams initially, the merger struggled, and by 1996, declining sales forced NeoStar to file for Chapter 11 bankruptcy. The company's assets were purchased for $58.5 million by Leonard Riggio, the founder of Software Etc. and chairman of Barnes & Noble, who outbid Electronics Boutique by promising to keep 108 stores open. Riggio dissolved NeoStar and created Babbage's Etc., appointing Richard Fontaine as CEO and Daniel DeMatteo as president and COO. Three years later, in 1999, the company launched the GameStop brand with 30 stores and introduced gamestop.com, an online platform for purchasing video games, signaling a shift toward digital retail.
The Barnes Noble Era
In October 1999, Barnes & Noble Booksellers acquired Babbage's Etc. for $215 million, a deal facilitated by a special committee of independent directors since Riggio, the company's chairman, was also Barnes & Noble's principal shareholder. The acquisition included FuncoLand, a Minnesota-based video game retailer, which was renamed GameStop, Inc. in December 2000 in preparation for an initial public offering. Barnes & Noble retained control of the newly public company with 67% of outstanding shares and 95% of voting shares until October 2004, when it distributed its 59% stake to stakeholders, making GameStop an independent company once again. This period also saw the acquisition of Game Informer, a video game magazine first published in 1991, which would later become a key part of GameStop's media portfolio before being discontinued in August 2024 and sold to Gunzilla Games in 2025.
Who founded GameStop and when was the first store opened?
GameStop traces its origins to a single store opened in 1984 by two former Harvard Business School classmates, James McCurry and Gary Kusin. The founders named their Dallas-based venture Babbage's after the 19th-century computer pioneer Charles Babbage.
When did GameStop launch its online platform and what was the initial store count?
The company launched the GameStop brand with 30 stores and introduced gamestop.com, an online platform for purchasing video games, in 1999. This launch signaled a shift toward digital retail for the company.
What happened to GameStop stock in January 2021 and what drove the price increase?
GameStop's stock price skyrocketed from $17.25 to over $500 per share in January 2021, a 1,500% increase over two weeks. This surge was driven by retail investors on Reddit who noticed that short interest exceeded 100% of the company's free float.
How many stores did GameStop close in January 2025 and why did closures occur?
Over 400 stores closed in January 2025, the highest number of closures in a single month, as consumer shift to online marketplaces led to a significant decline in revenue. The pandemic also accelerated the company's decline during this period.
Who is the current chairman of GameStop and when did he take over as CEO?
Ryan Cohen, founder of Chewy and a large GameStop shareholder, was named chairman in 2021 and took over as CEO in September 2023 without collecting a salary. Cohen's leadership focused on restructuring the company and launching an NFT platform in 2021.
How many stores does GameStop operate as of 2025 and where are they located?
As of 2025, GameStop operates 3,203 stores, including 2,325 in the United States, 374 in Australia, and 311 in Europe. The company sold its 193 Canadian stores in May 2025 and plans to sell its French operations in February 2025.
GameStop's global expansion began in earnest in 2005 with the $1.44 billion acquisition of EB Games, which brought operations into Australia, Canada, Europe, and New Zealand, expanding the company's footprint to over 4,250 stores worldwide. Subsequent acquisitions included Rhino Video Games in 2007, Free Record Shop's 49 Norwegian stores in 2008, and Micromania, a French retailer with 332 stores, for $700 million. The company also ventured into non-gaming retail with acquisitions like Simply Mac, an Apple authorized reseller, and Spring Mobile, an AT&T wireless retailer, though these efforts faced mixed results. By 2016, GameStop had acquired 507 AT&T stores, attempting to diversify beyond the video game market, but these ventures ultimately contributed to financial struggles as the core business of physical game sales began to decline.
The Short Squeeze Phenomenon
In January 2021, GameStop's stock price skyrocketed from $17.25 to over $500 per share, a 1,500% increase over two weeks, driven by retail investors on Reddit who noticed that short interest exceeded 100% of the company's free float. The Securities and Exchange Commission later reported that while a short squeeze did not appear to be the main driver, the episode highlighted the role of short selling and short covering in market volatility. The company received significant media attention during January and February 2021, and was ranked 577th on the Fortune 500. This event marked a turning point in the company's history, drawing unprecedented attention to its financial struggles and the power of retail investors to influence stock markets.
Pandemic And Restructuring
During the COVID-19 pandemic, GameStop faced criticism for its response to stay-at-home orders, with some stores remaining open in violation of local regulations, leading to accusations of prioritizing business over public safety. The company closed all physical operations from March to May 2020, though it continued online and curbside sales, with digital sales growing by 519% while retail dropped by more than 30%. In response to financial losses, executives took pay cuts, with CEO George Sherman reducing his salary by 50% and other executives by 30%. The pandemic also accelerated the company's decline, with over 400 stores closing in January 2025, the highest number of closures in a single month, as consumer shift to online marketplaces led to a significant decline in revenue.
The Ryan Cohen Turnaround
In 2021, Ryan Cohen, founder of Chewy and a large GameStop shareholder, was named chairman, and later took over as CEO in September 2023 without collecting a salary. Cohen's leadership focused on restructuring the company, including the sale of loss-making operations in Europe and Canada, and the launch of an NFT platform in 2021. The company also announced plans to use its cash reserves to buy Bitcoin in March 2025, signaling a shift toward digital assets. Despite these efforts, GameStop continued to face financial challenges, with record losses in 2018 and ongoing struggles to adapt to the changing retail landscape.
The Future Of Gaming Retail
As of 2025, GameStop operates 3,203 stores, including 2,325 in the United States, 193 in Canada (sold in May 2025), 374 in Australia, and 311 in Europe, with the company planning to sell its French operations in February 2025. The company has discontinued its NFT platform and Game Informer magazine, focusing instead on core gaming retail and merchandise. Despite these efforts, the company faces an uncertain future, with declining sales and a shift to online marketplaces challenging its traditional business model. The company's ability to adapt to these changes will determine its long-term survival in the rapidly evolving gaming industry.