Everyone’s favorite meme stock is once again in focus today. GameStop (NYSE:GME) is trending lower, on news that Ryan Cohen has been appointed the company’s chairman and CEO. As of early afternoon trading, GME stock is down a little more than 1% following this announcement.
One might think that a more dedicated and involved Ryan Cohen would be great for the GameStop story. Indeed, GME stock has surged on news that Cohen would be taking a more active role in the company in the past. Accordingly, many retail investors appear to be excited about this move and suggest that this could perhaps be the catalyst for another rally in this meme stock.
However, Wedbush analyst Michael Pachter isn’t so excited about this news. Let’s dive into what he said about the move, which is undoubtedly contributing to today’s price action with this stock.
GME Stock Sinks as Investors Digest New CEO
In the mind of Wedbush’s Michael Pachter, the shift from having Ryan Cohen take on the president, chairman, and CEO roles (instead of his previous executive chairman position) doesn’t affect the fundamentals of the company’s business. In fact, Pachter signaled he believes the continued decline in physical video game sales will likely continue.
Additionally, Pachter put forward a rather scathing opinion that “during their tenure, he had the ‘idea’ of becoming an NFT marketplace, which has failed miserably and is on course to be shut down … He has no ‘new idea’, and clearly couldn’t convince anyone competent to join his quest in tilting at windmills.”
That’s a strong take but one that appears to be fair. While many retail investors don’t want to hear it, GameStop is a business in secular decline, which is burning through cash and doesn’t really hold any meaningful growth prospects over the medium to long term.
Wedbush has highlighted the key issue with this company, in that new management or shiny new strategies likely won’t be able to bring this company back to its former glory. Indeed, the fact that the company couldn’t recruit a “competent” CEO is something investors may want to be concerned about.
On the date of publication, Chris MacDonald did not have (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.
