June 8 (Portal) – GameStop (GME.N) fell about 19% on Thursday and faced its worst session in two years after the surprise departure of a handpicked CEO to lead online expansion raised concerns about the ailing video game retailer’s business.
The fall of former Amazon.com executive Matt Furlong came with the appointment of top shareholder Ryan Cohen as CEO of a company he made a darling of meme stock traders with the promise of a digital revolution.
Still, GameStop was set to lose half of its 2023 profits and a market value of around $1.3 billion, with one analyst saying management change has been the only constant over the past few years.
“It’s hard to form an opinion when there’s no earnings release, little or no communication with investors and a lack of a consistent strategic vision,” said Jefferies’ Andrew Uerkwitz.
“One consistency remains, changes at the top. In the last 5 years, GameStop has had 5 CEOs and 3 CFOs.”
A man walks in front of a GameStop store in the Jackson Heights neighborhood of New York City, New York, U.S., January 27, 2021. Portal/Nick ZieminskiThe roller coaster ride of GameStop stock
Uerkwitz is among the latest analysts to cover GameStop after a massive pandemic-era rally fueled by traders on Reddit prompted multiple brokers to say the stock price has decoupled from its fundamentals.
The company’s shares are down nearly 80% from the $120.75 peak it hit during the 2021 meme stock saga. The stock is trading at a price-to-sales ratio of 1.38 year-to-date, compared to 0.37 for Best Buy (BBY.N). , according to the refinitive.
GameStop, too, has struggled to fulfill Cohen’s promise to make it the Amazon of video game stores, as there have been several high-profile exits in recent months, including ones that came from Chewy co-founder’s personal network.
The video game retailer, which still relies primarily on brick-and-mortar stores, on Wednesday reported its fourth straight quarterly revenue decline and a larger-than-expected loss.
“GameStop is doomed,” said Michael Pachter of Wedbush Securities. “Furlong’s lack of clear direction and callous termination means Cohen will struggle to find a qualified replacement.”
Reporting by Akash Sriram and Jaspreet Singh in Bengaluru; Edited by Devika Syamnath and Shounak Dasgupta
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