GameStop plunged 22% on Thursday after the video game retailer fired its CEO and reported a quarterly revenue decline.GameStop had hired its now ex-CEO from Amazon in a bid to turn around the struggling retailer.The company said its largest investor, Ryan Cohen, would be named executive chairman. Loading Something is loading.
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An executive shakeup at GameStop, combined with a quarterly revenue drop, led to a massive decline in the video game retailer’s stock price on Thursday.
GameStop stock plunged 22% in early Thursday trading after the company said it fired its CEO, Matthew Furlong, who was hired from Amazon in June 2021 in a bid to turn around the struggling retailer. In addition to the firing, the company said Ryan Cohen would be named executive chairman of the company.
Cohen has turned into a meme-stock activist investor, with the billionaire cheering on the turnaround strategies of struggling retailers like GameStop and Bed Bath and Beyond. While Bed Bath and Beyond ultimately filed for bankruptcy, GameStop is still alive, and Cohen is its largest investor with a 12% stake.
Cohen has advocated for GameStop to transition away from its physical stores and beef up its e-commerce business, which has lower costs than operating a footprint of hundreds of physical locations.
Shortly after Wednesday’s announcement that Cohen had been named executive chairman of GameStop, Cohen tweeted: “Not for long.”
In addition to the executive shakeup, GameStop announced its fiscal first-quarter revenue of $1.237 billion, which represented a year-over-year decline of 10%. The company said it generated a net loss of $50.5 million, and that it’s cash on hand totaled $1.31 billion.
The company shied away from hosting a conference call to talk through its earnings results given the firing of its CEO. No new CEO was named in the company’s press release.
Wedbush managing director Michael Pachter was unimpressed with the shakeup as GameStop, with the analyst reiterating his “Sell” rating on the stock and lowering his price target to $6.20 per share from $6.50, representing potential downside of 69% from current levels.
“We remain convinced that GameStop is doomed, with declining physical software sales and a shift of sales to subscription services and digital downloads sealing its fate… We think that the lack of clear direction and the callous termination of Mr. Furlong all but ensures that Mr. Cohen will have difficulty attracting a qualified replacement,” Pachter said in a Thursday note.