After firing its CEO, video game retailer GameStop’s (NYSE:GME) stock fell 22% overnight.
Matt Furlong, a former Amazon (NASDAQ:AMZN) executive, was the fifth CEO let go in the last five years. Chairman Ryan Cohen handpicked him after a takeover by Cohen on behalf of small investors. Cohen named himself executive chairman.
GME stock is set to open this morning at about $20.30 per share, a market capitalization of $6.2 billion on 2022 revenue of $5.9 billion.
GME Stock: Game Over
GameStop’s press release on the firing only said Furlong had been terminated and Cohen elected executive chairman.
The reason for the firing was evident in the company’s earnings release, also dated June 7. The company lost $50.5 million, 17 cents per share, on revenue of $1.24 billion. While the loss was one-third of last year’s, revenue was down 10%.
The elevation of general counsel Mark Robinson to general manager was revealed in the company’s 8-K report. The statement on business priorities emphasized cost controls with “increased emphasis on higher margin collectibles and pre-owned product categories.”
Cohen co-founded Chewy (NASDAQ:CHWY) and sold it to privately-held Petsmart, which then launched a successful public spin-out. His reputation and cash from that sale let him move on GameStop. It spiked to as high as $81 per share in early 2021. Later Cohen made a public run at Bed, Bath & Beyond but sold as that retailer spiraled into bankruptcy.
Traders at Stocktwits were dismissive of Cohen and negative on the stock. “I would be a better CEO than Furlong or Cohen,” wrote one. “There’s no debating. It’s trash,” wrote another.
What Happens Next?
Cohen convinced thousands of small investors he was a business genius off one deal that someone else capitalized on. Now he must either turn GameStop around in the face of cynical critics or see his own reputation ruined. His recent tweets indicate more executive firings may be coming.
On the date of publication, Dana Blankenhorn held a LONG position in AMZN stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
