GameStop | Business Upturn

GameStop plunges 22% after CEO firing, Ryan Cohen named Executive Chairman

Viditha Ganji — Thu, 08 Jun 2023 17:41:59 +0000

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.

Robinhood, Citadel, and Melvin Capital to give testimony at GameStop hearing

Arnav Dogra — Sat, 13 Feb 2021 06:51:16 +0000

The CEOs of companies including Robinhood, Citadel, Melvin Capital, Reddit, and more that were involved in the GameStop mania are all now prepared to present their testimony before US Congress in the case regarding the same.

Maxine Waters, the U.S. Representative chairing the said hearing said, “The House Committee on Financial Services will hold the hearing on February 18, and will focus on short selling, online trading platforms, ‘gamification’ and their systemic impact on our capital markets and retail investors.”

Robinhood has met with severe criticism because it had temporarily suspended trading of GameStop shares which according to experts was done to prevent its intraday-trading customers from benefitting from the craziness.

In a statement which announced the commencement of the hearing, Waters said, “private funds engaging in predatory short selling to the detriment of other investors must be stopped. Private funds engaging in vulture strategies that hurt workers must be stopped.”

“Addressing that predatory and manipulative conduct is the responsibility of lawmakers and securities regulators who are charged with protecting investors and ensuring that our capital markets are fair, orderly, and efficient,” she added pointing to Citadel’s actions during the mania.

Citadel, a hedge fund, has received widespread backlash and has been accused of having orchestrated this whole conspiracy because it somehow managed to divert funds just before the stock price took a hike and was able to save about $50 million.

Reddit raises $250 million, valuation hits $6 billion

Devanshu Singla — Tue, 09 Feb 2021 05:45:28 +0000

Reddit, the social media platform has now doubled its valuation to $6 billion after a recent round of funding. Reddit has raised $250 million in funding led by venture-capital firm Vy Capital, The Wall Street Journal (WSJ) reported. The company was valued at $3 billion when it last raised funds in February 2019, according to WSJ report.

“It’s a good market to fundraise, valuations are very high right now. It never hurts to raise money when there is an opportunity to do so and Reddit had a strong year” Reddit Chief Executive Steve Huffman told WSJ in an interview.

A Reddit thread, ‘r/wallstreetbets’, blew up after the users had decided to buy stocks of companies like GameStop that the Wall Street Hedge Funds were heavily short-selling. The price of these shares shot up in a matter of days leading to giant Hedge Funds incurring huge losses. Huffman also revealed that the advertising revenue of the company has increased by 90 per cent in the December quarter of 2020.

“We are also readying to double the number of Reddit employees this year,” Reddit said in a statement.

The company has further said that its recent developments include the acquisition of short-form video platform Dubsmash that offers ‘highly polished video creation tools’ to the platform and “encourages under-represented creators to find a home on Reddit.”

“We decided that now was the right opportunity to make strategic investments in Reddit including video, advertising, consumer products, and expanding into international markets,” the statement added.

Brokerage app Robinhood lifts trading restrictions on all stocks, including GameStop

Chirag Jha — Fri, 05 Feb 2021 05:36:04 +0000

According to an update on the trading platform’s support page, Robinhood Markets Inc. has removed limits on buying shares of GameStop and AMC Entertainment Holdings Inc., stocks at the centre of the battle between Reddit-empowered retail traders and short-sellers.

Earlier in the day, Robinhood’s website showed that the trading limit on GameStop’s shares was set at 500, while for AMC the limit was set at 5,500 shares. Trading restrictions on a few other stocks had been lifted on Wednesday.

GameStop has plunged 84% so far this week while AMC has lost 47% as retail traders flocked to other corners of the stock market, such as small drug developers. The stocks skyrocketed in late January as a band of retail traders that populate Reddit’s WallStreetBets forum sought to fend off short-sellers.

GameStop’s shares and others favoured recently by retail investors fell further on Thursday, while the U.S. Treasury Secretary Janet Yellen vowed to protect investors, but also said financial market regulators needed to fully understand the recent trading frenzy before taking any action.

Vlad Tenev, the CEO of Robinhood, said to USA Today this week that, “the firm built the trading app to serve the millions of people left behind by the U.S. financial system — not hedge funds”.

Netflix among others to script the GameStop chain-of-events

Arnav Dogra — Tue, 02 Feb 2021 07:32:08 +0000

It had only been a week and a half since the GameStop share price rally started threatening the United States Wall Street hedge funds that had bed against it all because of a Reddit message board decided to boost the share prices of struggling companies.

Insiders have claimed that film industry giants including Netflix Inc. and Metro-Goldwyn-Mayer Inc. have already started making plans to turn this into a movie.

Apparently, Netflix is in talks with screenwriter Mark Boal, to create a movie that would possibly star the 24-year old actor, Noah Centineo.

At Metro-Goldwyn-Mayer Inc., plans are being made to work with the soon-to-be-released manuscript titled “The Antisocial Network” by Ben Mezrich about the GameStop happening. The studio was quick to act and even acquired the rights to the book. Mr Mezrich has already had success with his previous books about real-life events which later on went to be adapted into films. “21″ and “The Social Network, were the names of movies that were adapted from his books.

This isn’t the first time when Hollywood had decided to make a movie out of an economic disaster at Wall Street. This movie is likely to join the hoard of successful Wall Street movies like “The Wolf of Wall Street”, “The Big Short”, “The Rogue Trader”, and many more. Now both companies must move quickly to secure directors and a cast because getting there first can discourage competitors from pursuing similar projects. In today’s streaming ecosystem, there is more competition than ever to lure subscribers with buzzy titles that feel as timely as possible.

Reddit amateurs took aim at the wall street short-sellers

Devanshu Singla — Sat, 30 Jan 2021 07:34:31 +0000

The coordinated effort by users of the online forum Reddit to drive up the share price of GameStop and other companies is designed to turn the screw on short-sellers. To the layman, the dynamics at play here can seem really twisting.

In this case, Reddit users in a group called WallStreetBets noticed that hedge funds, including one called Melvin Capital, had taken a large short position in GameStop. They decided to punish the Wall Street big boys and launched a co-ordinated buying spree. That began forcing the price up – it is now up more than 1800% – increasing the losses for the short-sellers who had bet against it. They had suffered losses of $1bn already, according to reports on Thursday.

The hedge funds found themselves trapped in what is called a “short squeeze”, a kind of feedback loop that drives the price ever upwards. Short-sellers have been forced to buy back stock that they borrowed and sold because they need to return the shares fast or risk losing more money as the stock climbs higher, making their position even worse. Effectively they have been forced to bet on shares rising in order to offset their previous bet on them falling.

Hedge funds are not exactly the world’s favourite people, as they make huge amounts of money, often with ruthless disregard for the businesses. Several national financial regulators across the world imposed temporary bans on short-selling certain vulnerable stocks – such as banks or insurers during the post-2008 financial crisis – or even blanket bans on the practice.

The counter-argument is that you cannot successfully short a healthy company, as your bet will simply turn out to be wrong. Short-sellers can act as an early warning system highlighting bad businesses. They have often proved to be the first people to notice that a company is in trouble, sometimes even before the company’s directors do.

Video game retailer GameStop’s stocks hit $350; sparks outcry

Ushma Ghosh — Fri, 29 Jan 2021 07:34:12 +0000

The struggling GameStop, video game retailer’s stock has been making stupefying moves this month, wild enough to raise concerns from professional investors on Wall Street to the hallways of regulators and the White House in Washington.

It hit new heights Thursday when several trading platforms limited their customers from making certain trades with GameStop. The actions sparked more volatility in the market and an outcry from users of the platforms and some members of Congress who say small investors are being treated unfairly.

GameStop stock has rocketed from below $20 earlier this month to close around $350 Wednesday as a volunteer army of investors on social media challenged big institutions who had placed market bets that the stock would fall.

It has been maniacal this month. After sitting around US$18 three Fridays ago, it doubled in four days. It kept shooting higher, before nearly doubling on Tuesday and then more than doubling again on Wednesday to US$347.51. On Thursday, it gave back a chunk of those gains and finished the day at US$193.60, down 44 per cent. But it is still up an amazing 928 per cent through the first few weeks of 2021.

GameStop, based in Grapevine, Texas, sells video games at more than 5,000 stores, and the pandemic has been keeping customers away. Over the long term, a stock’s price tends to track with the company’s profits, and GameStop’s prospects for earnings remain cloudy. Many Wall Street analysts have price targets for GameStop at US$15 or below.