GameStop shares tumbled 22% on Thursday following the announcement of CEO Matthew Furlong’s termination and the appointment of Ryan Cohen, a meme-stock activist investor, as the company’s executive chairman. The stock decline was further fueled by the retailer’s quarterly revenue decline.
GameStop had brought in Furlong, formerly of Amazon, in June 2021 in an effort to revitalize the struggling retailer. However, the company’s recent decision to let go of Furlong has raised concerns among investors. Cohen, GameStop’s largest investor with a 12% stake, will step into the role of executive chairman.
Cohen, known for his involvement in turning around companies like GameStop and Bed Bath and Beyond, has advocated for GameStop to shift away from its physical stores and focus on strengthening its e-commerce business. His strategies have gained attention among retail investors and meme-stock enthusiasts. In response to his appointment as executive chairman, Cohen tweeted, “Not for long.”
The executive shakeup coincided with GameStop’s announcement of its fiscal first-quarter revenue, which amounted to $1.237 billion, marking a 10% decline compared to the previous year. The company reported a net loss of $50.5 million and disclosed $1.31 billion in cash reserves.
Due to the abrupt changes and lack of a conference call to discuss the earnings results, Wedbush managing director Michael Pachter expressed skepticism about the company’s future. Pachter reiterated his “Sell” rating on GameStop stock and lowered his price target to $6.20 per share, indicating a potential downside of 69% from current levels. He highlighted concerns about declining physical software sales and the shift toward subscription services and digital downloads, which he believes will seal the retailer’s fate.
Pachter further emphasized that the termination of Furlong without a clear direction for GameStop’s future may pose challenges for Cohen in attracting a qualified replacement.
As GameStop navigates these changes, market watchers will closely monitor the company’s ability to adapt and execute its turnaround strategy under Cohen’s leadership. Investors and industry analysts will also keep a keen eye on the retailer’s efforts to leverage its e-commerce potential while addressing the declining physical sales landscape.