GameStop CEO Ryan Cohen Has $35 Billion Reasons to 10x the Stock. Should Investors Buy In?

Recently, Tesla shareholders approved an enormous, potentially $1 trillion pay package for CEO Elon Musk if the legendary entrepreneur can hit lofty financial goals set by Tesla's board of directors. GameStop (NYSE: GME) now appears to be taking a page from this playbook by announcing a potentially massive long-term performance award for CEO Ryan Cohen, who took over the company in late 2023.

Under the plan, Cohen is not guaranteed any pay through salary, cash bonuses, or stock that vests over time. However, if Cohen can deliver strong growth, he could earn tens of billions of dollars.

The growth is based on hitting certain EBITDA (earnings before interest, taxes, depreciation, and amortization) and market cap thresholds, which will release tranches of the award.

Image source: Getty Images.

GameStop plans to grant Cohen stock options to buy over 171.5 million shares at the price of $20.66, which, if you do the math, is over $3.5 billion. For Cohen to obtain the entire award, GameStop must earn $10 billion in EBITDA and see its market cap rise to $100 billion. At that level, Cohen's award would be worth over $35 billion.

Through the first nearly 10 months of 2025, GameStop had generated about $136 million of EBITDA. As of this writing, GameStop traded at about a $10.3 billion market cap.

Portions of Cohen's incentive vest upon GameStop reaching certain thresholds. For instance, the first tranche, 10% of the award, will vest if GameStop reaches a $20 billion market cap and earns $2 billion in EBITDA. Shareholders still need to approve the plan at an upcoming special meeting in March or April. Should investors buy in?

GameStop has made progress

GameStop has improved its financial profile, largely by shrinking its brick-and-mortar footprint and by growing its newer collectibles business, which has significantly increased revenue this year and now accounts for close to 28% of total revenue through the first three quarters of 2025.

However, the company's software business, which sells new and pre-owned video games, has seen a significant decline. GameStop's largest business, involving the sale of hardware like video game consoles, is still declining, but not nearly as bad as software. As a result, GameStop has seen a significant improvement in operating cash flow, EBITDA, and earnings this year.

Cohen is clearly a capable CEO, and he is now more incentivized than ever, not to mention that he already owns over 9% of outstanding shares.

However, GameStop currently trades at about 27 times its annualized 2025 earnings. This seems like a rich multiple for a company struggling to stabilize revenue in two of its main businesses that generate over 70% of total revenue. GameStop will likely always have some meme magic that makes its price erratic. But even with recent improvements, I struggle to see how this is a good investment right now from a fundamental perspective.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.