- GameStop can capitalize on its current fame to revamp its business, Kevin O'Leary says.
- The "Shark Tank" investor suggested the retailer could execute a Netflix-style pivot.
- O'Leary also warned against shorting the stock given its passionate following.
- See more stories on Insider's business page.
GameStop could leverage the hype around its stock to transform its business and stage a comeback, "Shark Tank" star Kevin O'Leary said in an interview this week.
The video-games retailer's brand "has way more value today than it had five months ago, before it became part of every headline around the world, day after day," O'Leary told Kevin Paffrath on the influencer's YouTube channel, Meet Kevin.
The O'Leary Funds and O'Leary Ventures boss — whose nickname is "Mr. Wonderful" — attributed GameStop's newfound fame to the Reddit and Robinhood users who executed a short squeeze on the stock. They helped boost the company's stock price from about $17 to an intraday high of $483 in January.
O'Leary pointed to Netflix, which pivoted from physical disks to online streaming in 2007, as an example of a company that successfully made the shift to digital.
"Netflix saw the writing on the wall when they were mailing DVDs to everybody and said, 'We're gonna digitize this,' and they had a brand," O'Leary said. "Maybe GameStop can do the same thing," he continued, suggesting the company could offer new services to gamers, or host classes and other gatherings in its stores across the US.
"I think it's going to get a second kick at life," he added.
O'Leary also warned investors not to bet against GameStop and its army of individual shareholders.
"If I was short that stock right now, I'd be worried," he said. "With this whole social constituency supporting it, the pricing of the stock is kind of irrelevant at this point."
Chewy cofounder Ryan Cohen, one of GameStop's biggest shareholders and possibly its next chairman, clearly agrees with O'Leary that the company can deliver a second act.
The activist investor has overhauled the company's board, wants to revamp its strategy to focus more on e-commerce, and likely spurred its recent decision to raise up to $1 billion by issuing new stock.
Disclosure: Mathias Döpfner, CEO of Business Insider's parent company, Axel Springer, is a Netflix board member.