GameStop (NYSE:GME) stock recently plunged lower after the company reported a disappointing first quarter and the termination of CEO Matt Furlong. In addition, GameStop appointed Ryan Cohen as Executive Chairman of the company. However, that didn’t stop two insiders from viewing the situation as a buy-the-dip opportunity.
On June 9, Director Alain Attal purchased 10,000 shares at an average price of $22.40 per share. In total, the purchase was worth $224,000. Following the transaction, Attal now owns a total of 538,692 shares.
On the same day, Director Lawrence Cheng purchased 5,000 shares at an average price of $22.37 per share. The transaction, worth $111,900, brought his total stake to 49,088 shares. Both Attal and Cheng’s purchases came just two days after the video game retailer reported its earnings.
Insiders Buy the GME Stock Earnings Dip
Insider activity for GME stock has been surprisingly bullish this year. No insider has sold shares on the open market in 2023 while two insiders — Attal and Cheng — have made open market buys. In addition, there have been a total of three insider buys this year, including the two mentioned above. The other buy was made on March 29 by Cheng for 5,000 shares at an average price of $22.79 per share. So far this year, insiders have purchased $449,889 worth of GME stock on the open market while selling zero shares.
As the old Peter Lynch saying goes, “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.” That certainly seems to be what Attal and Cheng are doing.
Meanwhile, GameStop seems to be going through plenty of changes, namely leadership switch-ups. The company has also engaged in cost-cutting practices, such as initiating exits and partial wind-downs in Europe in an attempt to boost profitability. During Q1, GameStop reported a net loss of $50.5 million, improving from a net loss of $157.9 million a year ago. At the same time, sales for the quarter totaled $1.237 billion, down from $1.378 billion last year.
Ryan Cohen is a popular figure among shareholders, who have high hopes that he will turn the company around. GameStop noted that the new Executive Chairman will “focus on capital allocation and overseeing management.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
