The video game retailer has fired its previous CEO.
(Photo: Reuters)
new York US video games retailer Gamestop posted its fourth straight quarterly loss and fired its CEO Matt Furlong two years after his appointment. The major shareholder and chairman of the board Ryan Cohen is now taking the helm, as Gamestop announced on Wednesday evening.
Management gave no reason for Furlong’s departure, but said it was “not based on disagreements with the company on any matter related to its business operations, policies or practices.” The development was not well received by investors: the share fell by more than 20 percent in over-the-counter trading.
Cohen made his fortune in the billion-dollar sale of online pet supplies retailer Chewy in 2017. After Gamestop shares had become a plaything for speculators in early 2021, a settlement by Cohen’s activist investment company RC Ventures with Gamestop earned the major shareholder a seat on the board of directors at the time, and he was elected chairman of the board in the middle of the same year.
According to stockbrokers, small investors on the Reddit online platform agreed to make concerted purchases of the paper in order to force hedge funds to cancel their bets on a price drop. The share price then multiplied.
Gamestop posted a drop in sales of around ten percent to $1.24 billion in the first three months. Adjusted loss per share was $0.14, two cents higher than analyst estimates.
The development fueled uncertainty among investors: the share, which has already lost 65 percent in value since Furlong’s appointment, fell by more than 20 percent in after-hours trading. Some analysts are wondering if Cohen, two years after his appointment as chairman of the board, can turn the tide at Gamestop. “It reflects the complete lack of strategy,” commented Michael Pachter, an analyst at broker Wedbush Securities. The corona pandemic had forced the company to close hundreds of stores and switch to online trading.
More: Gamestop’s best quarterly earnings in two years