Stocks climb higher, led by energy

GameStop is rising in premarket trading after the company announced a long-term performance package for Chairman and CEO Ryan Cohen that completely tethers his financial interests with those of shareholders as well as the company’s operational performance.

Under this plan, Cohen would receive options that enable him to purchase 171.5 million shares of GameStop at $20.66 apiece — but only if the market valuation of the company exceeds certain thresholds and GameStop generates enough cumulative earnings before interest, taxes, depreciation, and amortization (EBITDA).

So Cohen can’t benefit personally from another meme stock surge in the stock unless that’s combined with a continued increase in profitability.

“Under the award, Mr. Cohen receives no guaranteed pay — no salary, no cash bonuses, and no stock that vests simply over time,” per the press release. “Instead, his compensation is entirely ‘at-risk,’ meaning he will only be paid if the Company achieves significant market and operational goals.”

The package is divided into nine tranches, each with a different market cap and cumulative EBITDA hurdle. The first tranche vests if GameStop clears a $20 billion market cap while the company generates $2 billion in EBITDA under his leadership. Per GameStop, Q1 2026 will be the starting point from which this EBITDA performance hurdle will be tracked.

On a closing basis, GameStop has exceeded this $20 billion threshold only during its 2021 meme stock mania. The milestones for different tranches to vest run in increments of $10 billion (up to $100 billion) for market cap, and $1 billion (up to $10 billion) for EBITDA.

Cohen’s key moves as leader of the retailer have been to lean into collectibles, which have seen massive growth, while pursuing an aggressive cost-cutting campaign to improve its financial position. And, I suppose, doing the bitcoin treasury thing.

This new package is subject to approval by shareholders, a vote that Cohen will recuse himself from.

Mr. Blue Sky

So, just how much could this be worth to Cohen, if he somehow turns the ailing retailer into a profitable machine worth more than Nike? Well, let’s just say he won’t be missing his salary.

At a $100 billion market cap with the current share count, GME’s stock would trade at about $223. That would imply Cohen’s stock options to purchase 171.5 million shares at $20.66 would be worth an eye-watering $34.7 billion.

But that, unfortunately, is too simple. Because each tranche vests in turn, and because GameStop is offering over a third of its current shares outstanding, we have to take the dilution into account, which would impact all shareholders, Cohen included.

Assuming all of the awards were exercised upon being hit — e.g. the first 10% coming after the first tranche, the next 20% after the second, etc. — GameStop’s shares outstanding will soar once again.*

The whole GME pizza will be worth the same, but there’ll be a lot more slices with each tranche — about 17 million more... and they’ll all be owned by Cohen. Here’s a table showing the mechanical impact of each threshold being hit, on a very theoretical (and aspirational) GME share price.

Taking the napkin math above, this would mean Cohen’s 171.5 million stock options would be worth closer to $24 billion.

Of course, what will really break your brain is the fact that markets are forward-looking and traders would be adjusting in real-time as each dilutive milestone approached.

*The company made the most of its elevated stock price during its meme stock fame, turning its balance sheet into a fortress.

D-Wave Quantum announced Wednesday that it has struck a deal to purchase Quantum Circuits for $550 million, as the annealing-centric quantum computing company continues its push to bolster its gate-model capabilities.

The company said that $300 million will be paid in D-Wave stock, with the remainder in cash.

D-Wave is the major player in annealing quantum computing, an approach that solves more specialized optimization problems. Gate-based quantum computers, which aim to address even more complex and broad queries, are the dominant approach being pursued by publicly traded quantum computing firms. Gate model developers have also tended to get more interest from government agencies, as their technology is seen as the ultimate end point for quantum computing and therefore more worthy of support.

“By combining the world’s leading annealing quantum computing company with the world’s leading developer of error-corrected gate-model technology, D-Wave will dramatically accelerate the projected time to a scaled, error-corrected gate-model quantum computer alongside and complementary to its commercial annealing quantum systems,” per the press release. “Combining these technologies is expected to facilitate an accelerated commercial gate-model product roadmap that D-Wave believes will enable it to be the first to deliver fully error-corrected, scaled gate-model quantum computing”

Thanks to this acquisition, D-Wave plans to deliver an initial dual-rail gate-model system in 2026.

During the conference call that followed the release of Q3 earnings in November, CEO Dr. Alan Baratz highlighted gate-model development as a priority for D-Wave.

“Up until now, our investment in gate has been light, mostly because we haven’t had the funds to be able to grow that investment all that much. Now with the roughly $830 million in the bank, we have the resources to be able to invest more in that program, both internal investment and through acquisition to accelerate the program,” he told Sherwood News.

“We have one customer who has said, ‘When you have a gate-model system, I want it.’”

This news comes on the heels of the firm’s announcement on Tuesday that it’s solved a key problem when it comes to scaling superconducting gate-model quantum computers: how to keep qubits in the same place without producing too much heat.

In a massive reprieve for Strategy, index provider MSCI is letting digital asset companies stay in its benchmarks, sending shares sharply higher in after-hours trading.

The index provider had floated a proposal in which firms where crypto holdings are more than 50% of assets would be excluded from its global indexes, but has decided not to proceed with this for now.

“MSCI has determined at this time not to implement the proposal to exclude digital asset treasury companies (‘DATCOs’) from the MSCI Global Investable Market Indexes (‘MSCI Indexes’) as part of the February 2026 Index Review,” it announced in a statement.

Getting kicked out of key indexes would have caused funds to flow out of Strategy, the largest digital asset treasury company, and its peers.

“At this time,” of course, means the door is open to reconsidering this down the road, as MSCI plans on having a broader review and consultation on the treatment of DAT companies.

“Distinguishing between investment companies and other companies that hold non-operating assets, such as digital assets, as part of their core operations rather than for investment purposes requires further research and consultation with market participants,” according to MSCI.

Retail favorite Rocket Lab closed at a new all-time high on Tuesday, continuing a remarkable run over the last month that has carried the launch services provider and aspiring Space X competitor up more than 70% over the last month (compared to its close of $49.06 on December 5).

Rocket Lab saw elevated options activity during its run-up today, with well over 3.5x the 90-day average in options volume changing hands over the course of the day.

Other space plays such as AST SpaceMobile and EchoStar surged today.

Despite being a money-losing company — it’s never turned an annual profit as a public company — Rocket Lab’s share price has soared nearly 1,500% over the last two years, generating tons of loyalty and enthusiasm among retail investors.

In fact, Goldman Sachs has made Rocket Lab the heaviest weighting in the latest iteration of its GS Memes basket of thematic stocks, just ahead of AST SpaceMobile, showing how enamored traders have become of such space stocks.