GameStop turns to Ryan Cohen. But Meme stock’s recovery looks unlikely.
GameStop has turned to activist investor Ryan Cohen as it looks to stem a loss of confidence in its turnaround strategy. But the video game retailer’s chances of returning to the heights it once reached as a meme favorite looked remote.
GameStop (ticker: GME ) stock plunged 19% in early trading on Thursday to $21.05. Appointing Cohen as executive chairman has failed to quell concerns about GameStop’s continued losses and declining revenue.
Perhaps more damaging was the cancellation of the company’s planned earnings call on Wednesday, leaving investors in the dark about GameStop’s future plans. Former CEO Matt Furlong, an ex-Amazon ( AMZN ) executive, had implemented a cost-cutting strategy that failed to convince the few Wall Street analysts who still cover the stock. GameStop said Wednesday that its board had fired Furlong earlier this week.
“We remain convinced that GameStop is doomed
physical software sales and a shift in sales to subscription services and digital downloads sealing its fate,”[ads1]; Wedbush analysts led by Michael Pachter wrote in a research note Thursday.
Wedbush lowered its target price for GameStop to $6.20 from $6.50, and maintained an Underperform rating on the stock.
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GameStop did not immediately respond to a request for comment.
The appointment of Cohen could mark an effort to regain excitement over GameStop stock when it was favored by retail traders hoping to cash in on hurting short sellers by betting bearishly on the company. After Cohen sold his stake in retailer Bed Bath & Beyond (BBBYQ) last year, however, he became a less popular figure among traders who helped fuel the meme-stock frenzy and who gather on social media such as Reddit’s WallStreetBets forum.
GameStop itself is now also a less popular focus for retailers. According to the “Meme Stock Factor” metric developed by Counterpoint Funds, which measures attention to a stock relative to its size, excitement over GameStop has recently fallen to levels lower than at any time since the meme stock highs of 2021. Attention instead is on stocks related to artificial intelligence technology.
Other meme stocks such as movie theater chain AMC Entertainment Holdings
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(AMC) has also faded as a focus of attention. AMC was down 4% in early trading Thursday.
Write to Adam Clark at adam.clark@barrons.com
