The rest is Wall Street history: They banded together to send GameStop’s shares to the moon—from single digits to $483. The traders had created the meme stock phenomenon of mom-and-pop investors pouring money into zombielike companies and, at least briefly, sending their shares soaring. 

And in doing so, they gave GameStop new life, however inexplicably. Now the company’s leaders are racing to ensure the business can thrive over the long term, and not just limp along like the convalescing patient that it is today. 

With more than 4,800 stores haunting strip malls globally at last count, GameStop is still very much the same brick-and-mortar game haven that it was a couple of decades ago. Video game software lines the walls. Meanwhile, a hodgepodge of Baby Yoda dolls and Call of Duty hoodies fill racks in the middle of the store. 

But make no mistake, GameStop is in a far better place today than it was before the meme stock frenzy. During the first nine months of GameStop’s current fiscal year, the company’s sales rose 27% to $3.8 billion versus the pandemic-battered first three quarters of its 2020 period. What’s more, GameStop has paid off virtually all the $200 million–plus debt that it had just before its stock took off (beyond a $46.2 million loan tied to the French government’s response to COVID-19) and later raised another $1.13 billion by selling shares to fund its turnaround and beef up its cash reserves.

This modest progress has helped solidify some of the stock gains the meme investors had initially created. During 2021, GameStop’s shares soared 688%, the fourth-best performance by a company on a major U.S. exchange with at least a $500 million market value, according to S&P Global Market Intelligence. (Since the new year, the stock has given up some of those gains.) 

Still, GameStop faces daunting challenges to any comeback. Video gaming has been shifting to digital for years. Gamers no longer need to visit retailers like GameStop or even head online to Amazon to get a physical copy of the latest releases. They can simply download them directly onto their game consoles, which risks GameStop’s once-invincible new and used games businesses becoming obsolete.

Consoles remain big sellers. But with the shift to downloadable games, it’s becoming harder to coax gamers into stores. In any case, consoles aren’t big moneymakers for their manufacturers, let alone for a middleman like GameStop. Microsoft already sells the Xbox, which retails for up to $500, at a loss, an executive testified in an unrelated court case in 2021. 

If it’s ever to return to profitability, GameStop has a lot of work ahead. Even as sales rose, losses for the nine months ending Oct. 30 totaled $233.8 million, versus a $295.8 million loss over the same period in 2020. 

Leading GameStop’s turnaround effort is Ryan Cohen, who became chairman in mid-2021 after staging what would turn out to be a successful activist investor campaign. The cofounder of online pet store Chewy, “Papa Cohen,” as he’s known on Reddit, was and is in many ways the shepherd that retail investors were looking for.

In the words of Wook Capital managing director Rod Alzmann, it’s Cohen who will remake the company into a “purveyor of all things gaming” by expanding in verticals like PC gaming and private-label products; improving the experience for online shoppers; and planting a stake in digital gaming and collectibles. Alzmann has nearly 1% of his personal portfolio invested in GameStop.

One year after the meme episode hit, though, GameStop executives are mostly quiet about their turnaround plans. 

Matt Furlong, installed as GameStop’s CEO last year amid a leadership shake-up, has spent the company’s earnings calls—they now last just a few minutes—discussing financials. But the Amazon veteran is light on specific plans beyond vague talk of exploring e-commerce and buzzy areas like non-fungible tokens, the digital collectibles that are created with the same technology underpinning cryptocurrencies.

At the same time, GameStop’s executives have kept Wall Street analysts at bay during those calls. None are allowed to ask management questions, in sharp contrast to most other publicly traded companies. 

“What is the strategy? I don’t know,” says Michael Pachter, a Wedbush Securities analyst who has an “underperform” rating on GameStop’s stock and complains that ignoring investors is no way to run a company. 

A spokesperson for GameStop, naturally, declined to comment for this article or to make any executives available for interviews.

Still, clues of what’s to come have started to emerge. Over the summer, for instance, GameStop added new warehouses in Nevada and Pennsylvania, suggesting e-commerce may be a path forward. Then, in January, the company was said to be creating a marketplace for non-fungible tokens, where video gamers could potentially buy and sell digital goods, such as game characters or weapons.

NFTs have become a burgeoning area of interest for video game makers recently, with firms such as Ubisoft, Zynga, and Electronic Arts all exploring the space in some manner. The idea is to provide players with a new way to unlock unique gear that can be resold to others. But most gamers have so far opposed the push, seeing it more as a cash grab than anything else. 

For GameStop, the appeal of an NFT marketplace is understandable, nonetheless. OpenSea, a leading NFT marketplace for buying and selling digital art—and collects a 2.5% fee on each sale—was recently valued at $13.3 billion.

Relatedly, GameStop is also close to partnering with two cryptocurrency companies to use their technology and invest alongside them in blockchain-based gaming, the Wall Street Journal reported. However, beyond GameStop looking to get in on the booming crypto economy, the calculus behind such deals is unclear. 

Taken together, GameStop’s efforts paint a picture of a company pushing into digital just as so-called Web3—which believers see as a decentralized version of the internet controlled by the masses rather than Silicon Valley elites—is taking shape. Or perhaps it’s merely a company glomming on to the latest tech trends to create an illusion of hope. But whatever the strategy, GameStop will need to be a different company from the one it has been up to now.

“I don’t know what they’ll do,” says Gary Kusin, a cofounder of one of GameStop’s predecessor companies who left in 1995. “But they won’t do it with video games. That train has left the station.”

Wall Street, at least, seems split. 

Jefferies analyst Stephanie Wissink wrote in a recent research note that she’s “increasingly enthusiastic about the changes underway” at GameStop and that “a range of new value streams will emerge” as a result. But she’s also concerned about the lack of details from the company, and worries that investors may run out of patience. 

For Wedbush’s Pachter, there are plenty of red flags. On the NFT plans alone, he doubts that game publishers will give GameStop the rights to resell NFTs based on their games, or even use GameStop’s marketplace to begin with. 

How long GameStop’s leadership has to turn things around remains a critical question. But if anything has been proved over the past year, it’s that GameStop has, in Pachter’s words, a “cult” of followers.

“By the way, Tesla’s a cult too,” Pachter adds, name-checking the hot electric-car maker. “So in fairness to GameStop, maybe there’s something there.” 

Taking stock

Over the past 18 months, as of late January, GameStop’s shares have soared a phenomenal 2,550%. Are there more gains ahead? Two Wall Street analysts weigh in. 

Bull case 

Jefferies analyst Stephanie Wissink expects GameStop’s stock to be near $100 a year from now—it was near $107 at press time—if there are no major business improvements. But if the company achieves several milestones, then its shares could hit $175, she says. That would require closing some stores, selling more video games than expected, and diversifying into video game accessories and collectibles.  

Bear case 

Wedbush analyst Michael Pachter warns that GameStop is roadkill. Its e-commerce initiative—based largely on selling boxed video games online—is outdated because games are going increasingly digital. Meanwhile, creating an NFT marketplace may make GameStop “a superfluous middleman.” His 12-month price target on the stock: $45, and even that price is justified mainly by the company’s cash reserves.

This article appears in the February/March issue of Fortune with the headline, “GameStop’s next meme.”