GameStop (GME) is bringing more retail investors to its meme stock, and it is not looking far to find them because they are just within its stores. The video game retailer has launched a reward program that will see thousands of its store workers own a piece of GME stock.
GameStop plans to give its U.S. store employees stock awards as part of a new compensation initiative, according to a Wall Street Journal (WSJ) report citing a leaked internal memo. Store leaders would get as much as $21,000 in GameStop shares. The stock awards would vest in installments over three years. It means GameStop’s insider retail investors will be required to hold on to their stocks for some time before they can sell.
GameStop’s Pivot to Digital Sales Strained Relationship with Store Workers
The gaming retailer has had a little difficult relationship with some of its store workers, following its focus on growing online sales. A Fortune report detailed mass resignations at some GameStop stores in Nebraska. The store workers quit in protest of low pay and unrealistic performance targets. Some of the staff who quit noted that the atmosphere changed after the video game retailer pivoted to e-commerce.
In the memo cited in the WSJ report, GameStop CEO Matt Furlong wrote that the store fleet remains critical to the retailer’s business. Indeed, the digital strategy has faced reality checks recently. For example, GameStop’s NFT sales have dropped sharply from the peak levels.
The stock award program for store staff may be an effort to motivate the team after the digital shift seemed to strain the relationship. The retail staff stock award program could cost GameStop as much as $50 million. In addition to potentially helping prevent brain drain, the compensation initiative may also motivate workers to do their best to help the business become profitable. Achieving profitability has become a priority for GameStop CEO Furlong.
Is GameStop Stock Expected to Rise?
Wall Street professionals are bearish on GameStop. According to TipRanks’ analyst rating consensus, GME stock is a Moderate Sell. The average GameStop stock price prediction of $17.50 implies 46% downside potential.
While Wall Street experts have a dim view of GameStop, retail investors seem optimistic. Retail investors are usually the force behind meme stock rallies. TipRanks’ Stock Investors tool shows that retail investor sentiment is currently Very Positive on GameStop. In the past 30 days, 5.6% of the top-performing portfolios tracked by TipRanks increased their exposure to GME stock.
Final Thoughts
The stock award to store workers should put GameStop shares in the hands of more retail investors, expanding an investment community base that already likes GME stock. It would be an added advantage if the stock reward program motivates workers to drive more store sales and help GameStop turn a profit.
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