Elon Musk Needs to Buy GameStop Next. Seriously.

When was the last time you visited a GameStop (NYSE:GME)? Its management team apparently rather you didn’t know; the firm stopped reporting same-store sales in 2021. E-commerce sales are also no longer reported separately, an ominous sign for a firm whose chairman once promised to build “a powerful e-commerce platform that provides competitive pricing, broad gaming selection,” etcetera.

Yet, no amount of hand-waving can hide an increasingly clear fact:

GameStop’s core business remains in terminal decline.

The Texas-based firm is now on track to lose $418 million in 2023, three times more than it burned through in 2021. Its NFT business has come six months too late, and its forays into e-commerce seem to have hit a brick (and mortar) wall. For all of Chairman Ryan Cohen’s efforts, his handpicked management team has failed to deliver the goods, despite the herculean efforts of GameStop shareholders to prop up its stock price.

So, perhaps it’s time to stop asking when the next GameStop short squeeze might happen, and consider this:

What if Elon Musk bought GameStop stock?

GameStop Needs an Elon Musk

First, let’s be clear: I wouldn’t wish the wrath of the world’s wealthiest man onto my worst enemy. The Tesla (NASDAQ:TSLA) billionaire has a long history of taking fights to extremes and even his well-intentioned actions can have damaging results. When your bank account is the size of a cruise ship, your wake can unintentionally sink passing boats.

Yet, Mr. Musk’s hard-driving style has also single-handedly transformed the carmaking business. Berkshire Hathaway’s (NYSE:BRK-A, NYSE:BRK-B) Charlie Munger has called Tesla a “minor miracle” and even online critic and author Stephen King grudgingly calls Mr. Musk a “visionary.” Love him or hate him, Elon Musk is the “chaos monkey” that stagnant industries often need.

Nowhere is this clearer than his overzealous takeover of Twitter’s operations. Why hire fancy management consultants to right-size your firm when you can fire half of the staff by tweet? And though Twitter’s rollout of its verified checkmark system was entirely botched, one has to marvel that it took less than two weeks to launch.

These are same “kick-in-the-pants” actions that GameStop now desperately needs.

GameStop on the Brink

GameStop’s new problem is the same old one:

Shiny plastic discs are a dying business.

In the pre-Cohen days, GameStop’s management was essentially tasked with winding down the retailer while extracting as much value as possible for investors. Between 2017-2020, GameStop returned around $800 million to shareholders while reducing store count by almost 30%. The company would also cut its capital expenditures by 55% and lower costs at the corporate level. All these are signs of a retailer getting ready to cross the rainbow bridge.

Its new management has failed to grasp this reality. Under CEO Matt Furlong, the firm has managed to burn through $811 million in a year by increasing corporate overheads without any meaningful plan to revamp its business. Walk into any GameStop retail location, and it will also become apparent that the company’s $60 million in capital expenditure is barely enough to keep the lights on.

Mr. Furlong’s new projects have also been duds. The company spent almost a year readying its NFT marketplace, only to launch in the middle of a massive crypto winter. And Web 3.0 gaming has essentially flatlined. GameStop’s Kira Genesis Collection posted only 28 trades on Nov. 28, down from 2,670 less than a month before. Only 2,475 unique owners are listed on its blockchain.

A return to “managed decline” has also become unattractive, given GameStop’s now-$7.7 billion enterprise value. No financial wizard could possibly squeeze that amount from the retailer’s remaining assets.

Can Elon Musk Save GameStop?

That leaves only one clear option for GameStop as a firm:

An Edgelord Shakeup.

GameStop essentially needs to turn around its brick-and-mortar business, expand into online gaming, get its mobile gaming strategy right…

… all while facing the prospect of running out of cash by Christmas 2023.

On the positive side, the firm has a legion of loyal financial backers. Almost 30% of the company’s shares are now directly held by transfer agents, and GME stock has the highest valuation of retailers that make no money, according to data from Thompson Reuters. It’s a situation that Elon Musk would have enjoyed as Tesla’s CEO.

GameStop also retains a loyal fanbase of consumers who insist on buying games in person.

But time is quickly running out for the videogame retailer. Shoppers are increasingly buying goods online, and they’re not doing it through GameStop’s site. According to data from TipRanks, traffic to GameStop.com has fallen 24% in the past month. Online rivals like Valve’s Steam have become what GameStop once hoped to be.

An Edgelord takeover, of course, will be anything but smooth. Corporate layoffs will increase, and golden parachutes deployed. And there’s no telling what someone like Elon Musk will do to the thousands of GameStop retail workers toiling away in its physical stores.

But it will be for the best. In 2015, writers at the Financial Times joked that the bankrupt RadioShack might have survived by selling fruit baskets or turning its stores into Zumba studios. If GameStop wants to avoid becoming that same punchline, its board should consider calling up Mr. Musk and asking if he’s available for another CEO role.

On the date of publication, Tom Yeung did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.