Ryan Cohen's $35 Billion Incentive Plan: Can GameStop Stock Justify the Bet?

GameStop has made headlines once again, this time not for meme stock volatility but for a bold compensation strategy. The company’s board has unveiled a potentially massive performance-based award for CEO Ryan Cohen that could reach $35 billion if he achieves ambitious targets. This move mirrors the controversial $1 trillion compensation package Tesla shareholders approved for Elon Musk. As GameStop prepares to seek shareholder approval for the plan in March or April 2026, investors are left asking whether this incentive structure signals genuine turnaround potential or simply another layer of speculation onto an already unpredictable stock.

The GameStop-Tesla Parallel: When Incentives Drive Board Strategy

The timing of GameStop’s announcement suggests the board is taking strategic cues from the tech world’s most high-profile compensation decisions. Tesla’s Musk deal demonstrated that boards are willing to offer transformative wealth if executives can deliver extraordinary growth. In GameStop’s case, Ryan Cohen faces a similar challenge: deliver exceptional financial results, or earn nothing from this particular incentive package.

Under the structure, Cohen receives no guaranteed base salary, cash bonuses, or time-vested equity from this specific award. Instead, the entire compensation hinges on hitting specific EBITDA and market capitalization thresholds. GameStop is offering Cohen stock options to purchase over 171.5 million shares at a $20.66 strike price—equivalent to more than $3.5 billion in notional value. The endgame requires GameStop to achieve $10 billion in annual EBITDA and a $100 billion market capitalization. At that valuation level, Cohen’s award would be worth over $35 billion.

The plan vests in tranches based on intermediate milestones. The first tranche—10% of the total award—unlocks when GameStop reaches a $20 billion market cap and $2 billion in EBITDA. This graduated structure theoretically aligns Cohen’s financial interests with shareholder value creation rather than offering windfalls regardless of performance.

Dissecting GameStop’s Financial Progress Under Cohen’s Leadership

To evaluate whether these targets are realistic, understanding GameStop’s current financial position is essential. Ryan Cohen assumed the CEO role in late 2023 and has systematically restructured the company’s business model. The results so far show meaningful progress but also highlight why skeptics question the viability of the board’s ambitious targets.

GameStop’s portfolio consists of three main revenue streams: hardware sales (video game consoles), software sales (new and pre-owned games), and collectibles. Through the first three quarters of 2025, the collectibles business has emerged as the growth engine, now representing nearly 28% of total revenue with significantly increased sales. This newer segment is thriving, which suggests Cohen has identified a viable expansion opportunity.

However, the company’s traditional core businesses tell a different story. The software segment, historically a reliable profit center, has experienced significant decline. Hardware sales—GameStop’s largest business—continues to contract, though at a slower pace than software. Together, these two segments still account for over 70% of total revenue, making their deterioration a serious concern for long-term sustainability.

Despite these headwinds, GameStop has demonstrated tangible operational improvements. The company’s cash flow metrics have improved substantially, and EBITDA generation has moved in the right direction. Through the first ten months of 2025, GameStop had generated approximately $136 million in EBITDA. The company’s recent market capitalization stands around $10.3 billion as of early 2026.

The Valuation Question: Is GameStop’s Stock a Buy at Current Levels?

Here’s where the fundamental investment case becomes more complicated. GameStop currently trades at approximately 27 times its annualized 2025 earnings—a substantial multiple for a company whose two largest revenue segments represent over 70% of income yet remain in structural decline. On traditional valuation metrics, this pricing suggests either exceptional confidence in Cohen’s turnaround efforts or continued reliance on what market observers sometimes call the stock’s volatile appeal.

Cohen himself remains committed to the mission. Beyond this new incentive package, he already owns more than 9% of GameStop’s outstanding shares, aligning his personal wealth with shareholder interests. His leadership has demonstrably improved operational execution compared to previous management. Yet execution improvements and retail enthusiasm don’t automatically create a compelling investment narrative at current valuations.

The path from GameStop’s current $10.3 billion market cap to the $100 billion required for Cohen to unlock the full $35 billion award represents more than a theoretical stretch. It would require the company to prove its collectibles growth can offset hardware and software declines, expand into new revenue categories, or achieve profitability multiples that compress the current valuation discount. While not impossible, the probability reflects either exceptional optimism or a bet that market dynamics rather than fundamental business strength will drive the stock higher.

The Investment Verdict

GameStop’s board has constructed an incentive package that meaningfully motivates Ryan Cohen to maximize shareholder value. The structure itself demonstrates reasonable alignment between executive compensation and company performance. However, whether investors should buy GameStop stock at current valuations remains a separate question from whether the incentive plan is well-designed.

The collectibles pivot shows promise, and Cohen has proven capable of operational management. Yet the company still trades at a rich multiple relative to earnings, and the fundamental business headwinds affecting hardware and software sales haven’t reversed. Investors considering GameStop should acknowledge that while the incentive plan increases the probability of management’s commitment to delivering growth, that commitment alone doesn’t solve the underlying business challenges or guarantee stock outperformance. The plan raises the stakes and clarifies management’s conviction, but the investment case ultimately rests on whether GameStop can successfully transform its core business before the collectibles surge alone cannot sustain momentum.