The GameStop share plunges after the fifth CEO exit in 5 years
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June 8 (Reuters) – GameStop ( GME.N ) fell about 19% on Thursday and was set for its worst session in two years after the surprise exit of a CEO handpicked to lead its online expansion, sparked concerns about the video game retailer’s ailing business.
The ouster of former Amazon.com CEO Matt Furlong coincided with top shareholder Ryan Cohen̵[ads1]7;s appointment as executive chairman of a company he made a favorite among meme stock traders with promises of a digital pivot.
Still, GameStop was set to wipe out half of its 2023 profit and about $1.3 billion in market value, with one analyst saying management changes have been the only constant in recent years.
“It’s hard to have an opinion without earnings, little or no investor communication and a lack of consistent strategic vision,” said Andrew Uerkwitz of Jefferies.
“A consistency remains, changes at the top. In the last 5 years, GameStop has had 5 CEOs and 3 CFOs.”
Uerkwitz is among the latest analysts to cover GameStop after a massive rally from the pandemic, fueled by traders banding together on Reddit, prompted several brokerages to say the share price had disconnected from fundamentals.
The company’s shares have fallen nearly 80% from the $120.75 peak they reached during the meme stock saga in 2021. The stock has a trailing 12-month price-to-sales ratio of 1.38, compared to Best Buy’s (BBY.N) 0.37, according to Refinitiv.
GameStop has also struggled to deliver on Cohen’s promise to make it the Amazon of video game stores, having seen several high-profile exits in recent months, including those taken from the Chewy co-founder’s personal network.
The video game retailer, which still relies mostly on brick-and-mortar stores, reported Wednesday its fourth straight drop in quarterly revenue and a bigger-than-expected loss.
“GameStop is doomed,” said Michael Pachter of Wedbush Securities. “The lack of clear direction and the uncertain termination of Furlong all but ensure that Cohen will have trouble attracting a qualified replacement.”
Reporting by Akash Sriram and Jaspreet Singh in Bengaluru; Editing by Devika Syamnath and Shounak Dasgupta
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