GameStop is struggling with declining physical sales of videogames.
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The man who helped transform
GameStop
from a troubled retailer into a meme stock darling is taking over as chief executive.
The videogame retailer’s board named
Chewy
co-founder Ryan Cohen the firm’s president, chief executive, and chairman. Cohen was previously serving as executive chairman while the firm looked for a replacement for former CEO Matt Furlong.
GameStop stock (ticker: GME) initially surged in premarket trading but closed down 1.9% to $16.84 on Thursday.
Cohen won’t receive compensation in his new role with the firm, though he is GameStop stock’s largest investor with a roughly 12% stake through his firm, RC Ventures.
Cohen revealed an activist stake in GameStop in 2020, calling on the firm to better invest in e-commerce efforts when short sellers were piling in to bet against the firm’s prospects. Retail investors on Reddit’s infamous WallStreetBets forum rallied behind Cohen, and shares began to surge in January 2021 when he joined the firm’s board with two of his associates. GameStop shares surged to a split-adjusted record close of $86.88 on Jan. 27, 2021.
A wave of executives with e-commerce experience joined GameStop after Cohen joined the board but have since departed, including Amazon alums like Furlong, former COO Jenna Owens, and former CFO Mike Recupero. Cohen was named chairman in June 2021 and became executive chairman of GameStop in June, following Furlong’s firing.
Cohen has amassed a cult-like following on certain corners of Reddit and X, formerly Twitter, who speculate he is communicating with investors by sending coded messages buried in emojis, GIFs, and memes.
When Cohen bought into
Bed Bath & Beyond
in 2022, some of his supporters began touting the retailer. Cohen sold his stake in August of that year, sending shares tumbling. The company filed for bankruptcy earlier this year. The Wall Street Journal reported earlier this month that the Securities and Exchange Commission is investigating Cohen’s Bed Bath sale. According to the Journal, Cohen said in a court filing related to an investor lawsuit about the sale that he decided to sell because the stock price “unexpectedly increased to a value that exceeded what we believed it was worth.”
Few analysts are still covering the stock. Wedbush’s Michael Pachter has a $6 target price on GameStop and Underperform rating. “With no path to a turnaround and the inevitable migration of physical software sales to digital downloads, we think Mr. Cohen’s appointment ensures GameStop’s demise,” Pachter wrote Thursday.
GameStop has benefited from sales of PlayStation 5 and Xbox Series X gaming consoles that still have disc drives, but it faces an existential threat as more sales shift to digital channels directly on the game systems. The company reported a narrowed quarterly loss that boosted the shares earlier this month, but they remain well off the heights reached during the meme-stock frenzy of 2021.
GameStop turned to crypto as a way to potentially diversify, though its nonfungible token marketplace has been viewed as a flop by Wall Street. The firm also announced a partnership with crypto exchange FTX in September 2022, just months before the firm’s collapse amid allegations of fraud against founder Sam Bankman-Fried.
Write to Connor Smith at [email protected] and Adam Clark at [email protected]
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