GameStop (NYSE:GME) is on the hunt for a new CEO, and GME stock bulls should be on watch.
So what do you need to know now? According to an exclusive Reuters report, GameStop is currently searching to replace George Sherman, the current chief executive. This comes as the retailer pivots from brick-and-mortar sales to e-commerce, and amid a broader turnaround strategy. GameStop has not commented on the news, although people familiar with the situation told Reuters the company has hired an executive headhunter to help.
It is key for investors to understand the broader turnaround story at play.
Ryan Cohen, the Chewy (NYSE:CHWY) founder and an activist investor in GME stock, joined the board of directors in January 2021. Since then, he has continued to shake up the C-Suite at GameStop. We saw CFO Jim Bell resign, and we have seen a handful of new execs come aboard. The company has brought in a new chief operating officer, a new chief technology officer and a new growth officer. Cohen is also behind big changes to the board, and will soon serve as chairman.
As Cohen and the strategic turnaround committee get to work, the CEO news is the biggest sign of change yet. r/WallStreetBets investors will be paying close attention.
Analyst Call Sends GME Stock, Reddit Stocks Back to Earth
However, investors should note that things have not all been smooth sailing for GME stock. In fact, despite the Reuters report, shares are down 12% intraday trading. This follows a bearish report from Ascendiant Capital Markets analyst Edward Woo.
On Monday, Woo made headlines when he downgraded GME stock from a “hold” to a “sell.” Underlying his rating change is his belief that GameStop faces business headwinds despite its turnaround plans. More specifically, he said increasing digital sales of video games threaten the retailer, and he warned about the long-term prospects of the company. Woo also warned that the broader Reddit stocks rally would run out of steam.
Cohen and the new GameStop CEO will face challenges as the company works to embrace e-commerce and other tech initiatives. However, InvestorPlace Markets Analyst Tom Yeung thinks with a little help from Redditors, GME stock could return to $500. Keep this story on your radar, and watch for a turnaround in GME and AMC Entertainment (NYSE:AMC) today. The latter stock appears to have taken a dive alongside GameStop, following the report from Ascendiant.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.