All eyes are on GameStop (NYSE:GME) this morning, as the video game retailer’s board of directors announced that it had appointed Ryan Cohen as CEO, president, and chairman, effective immediately. Following his appointment as chairman, Cohen will step down as executive chairman. GameStop has disclosed that Cohen will not receive any compensation for serving his new roles.
This lack of payment shouldn’t be a problem for the young CEO, as Forbes estimates his net worth to be $3.2 billion. On top of that, Cohen will also assume the position of principal executive officer from Mark H. Robinson, effective immediately. His responsibility under this role will include the oversight of all other GameStop executive officers.
GME Stock: Ryan Cohen Appointed as CEO
GameStop has experienced a significant management shakeup in the past few months. Last June, its board terminated Matt Furlong as CEO after he assumed the role in 2021. In replacement, Robinson was named as principal executive officer and general manager.
Now, the big question remains: Can Cohen save GameStop? Cohen first became involved with GME stock in January 2021 as an activist investor under his investment vehicle, RC Ventures. Shortly after, GME experienced a historic surge that saw its shares rise by over 1,500% in less than a month. However, shares of the company have largely been suppressed since then and are down by over 60% compared to the January 2021 peak.
During the second quarter of 2021, GameStop reported revenue of $1.18 billion, an adjusted gross profit of $331 million, a gross margin of 27.12%, and a GAAP EPS loss of 25 cents. In the most recent quarter, the company reported revenue of $1.16 billion, an adjusted gross profit of $306 million, a gross margin of 26.30%, and a GAAP EPS loss of 1 cent. Meanwhile, the price of GME has fallen significantly since the second quarter of 2021, with only GAAP EPS improving among the four metrics mentioned.
Furthermore, GameStop’s participation in a declining industry doesn’t seem to be helping its prospects. The digitalization of video games has directly hurt the company, which is evident in its lack of growth. As a result, Cohen is tasked with an extremely difficult mission with the cards stacked against him.
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.
